Strategic Natural Resources PLC signs first major commercial coal supply agreement
14 October 2008
Strategic Natural Resources PLC (”SNR”) is pleased to announce that its 74% owned subsidiary, Elitheni Coal (Pty) Ltd (”Elitheni” or the “Company”) has signed its first major commercial coal supply agreement with Indwe Power (Pty) Ltd (”IPPL”), an indirect subsidiary of IPSA Group PLC (”IPSA”).
Elitheni has entered into a Coal Supply Agreement (”CSA”) to supply approximately 1,000,000 tonnes of coal per annum for a period of 25 years, to IPPL for consumption in a 250 MW electrical power plant to be established at the mine mouth of Elitheni’s coal deposit at Indwe in the Eastern Cape of South Africa. The aggregate amount of coal delivered by Elitheni to IPPL shall be determined according to the calorific value of such coal and shall equate to an annual amount of 17.5 million Gigajoules, comparative in price to the prices Eskom is currently paying for coal on the Eskom Spot Market.
In addition, Elitheni has been notified by IPPL that it is actively considering the establishment of further power stations in the East London area of the Eastern Cape, of up to 1,000 MW capacity. In such event, both parties will negotiate a new framework agreement on terms substantially similar to the CSA announced today.
SNR’s Chief Executive, Jeremy Metcalfe said “In times of such uncertainty it is heartening to be able to announce this major event in our Company’s evolving story. This CSA supersedes the original coal supply framework agreement entered into with IPSA in August 2007 following the establishment of over 52 million extractable tonnes of coal based on proven and probable reserves and an increase in the potential exploration area from approximately 9,500 hectares to just short of 200,000 hectares.”
For further information, please contact:
Strategic Natural Resources plc
David Nel, Chief Executive Officer
+27 (0) 41 374 0842
Jeremy Metcalfe, Communications Director
+44 (0)7785 346 718
Nominated Adviser and Joint Broker - Allenby Capital Limited
Nick Naylor / Alex Price / James Reeve
+44 (0) 20 3328 5656
Joint Broker - SP Angel Corporate Finance Limited
Emin Eyi / Tercel Moore
+44 (0) 207 647 9646
FTI Consulting
Ben Brewerton / Georgia Mann
+44 (0)207 831 3113