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African Energy Resources executive chairman acquires shares on market

Thu, 06 Jun 2013 21:48:00 -0400

African Energy Resources (ASX: AFR) executive chairman Alasdair Cooke has acquired 611,739 shares of the company on the market.

The shares were bought for a consideration of $44,506, for an average price of $0.0727 each, bringing his total shareholding up to 33114664 shares held both directly and indirectly.

Cooke also holds 1 million performance rights; 250,000 Unlisted Options exercisable at $0.90 on or before 31 December 2013; 250,000 Unlisted Options exercisable at $1.10 on or before 31
December 2013; and 250,000 Unlisted Options exercisable at $1.30 on or before 31 December 2013.

African Energy had recently closed a formal share sale deed for the acquisition of the 1.3 billion tonne Mmamantswe Coal Project in south east Botswana from Aviva Corporation (ASX: AVA).

On completion of the sale and a capital raising, African Energy will have secured the rights to a total of 3.8 billion tonnes of coal in Botswana and increased working capital to around $6 million from capital raised.

The Mmamantswe Coal Project is in south-eastern Botswana, and comprises a Measured and Indicated Resource of 1.3 billion tonnes of thermal coal, including 895 million tonnes of Probable Reserves.

A 2009 Scoping Study completed by SRK concluded that a 10 million tonnes per annum open-pit mining operation could produce 2.4 million tonnes per annum of washed export coal (22MJ/kg, <20% ash) and 2.1 million tonnes per annum of middlings suitable for power station fuel (15.3MJ/kg, 38% ash) at a ROM (run-of-mine) cash cost of $9.10 per tonne.

An EIA was approved for the project by the Government of Botswana in October 2012.

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African Energy Resources closer to acquiring Mmamantswe Coal

Mon, 27 May 2013 22:19:00 -0400

African Energy Resources (ASX:AFR) has closed a formal share sale deed for the acquisition of the 1.3 billion tonne Mmamantswe Coal Project in south east Botswana from Aviva Corporation (ASX: AVA).

On completion of the sale and a capital raising, African Energy will have secured the rights to a total of 3.8 billion tonnes of coal in Botswana and increased working capital to around $6 million from capital raised.

Legal and technical due diligence was completed by African Energy on 24 May 2013 removing one of the conditions of the acquisition.

Tranche 1 of a A$5 million placement to Sentient Executive GP IV was ratified at a general meeting of African Energy shareholders yesterday.

A second tranche will raise $3.5 million via an issue of a further 29.16 million shares at A$0.12 which will occur concurrently with the completion of the acquisition of the project by African Energy.

The remaining conditions precedent to the complete the acquisition of the Project by African Energy are;

- Mmamantswe Coal (Pty) Ltd becoming the registered holder of 100% of PL69/2007 by no later than 26 July 2013.
- Approval of the transaction by Aviva’s shareholders under the ASX Listing Rules at a General Meeting expected to be convened in July.

Benefits of the acquisition/placements

For a relatively minimal amount, AFR will gain significant benefits from the Sentient placement and the acquisition of the Mmamantswe Coal project:

- A cornerstone institutional investor with a large financial capability and project development focus. This is an acknowledgement of the shared management vision between the Company and Sentient.

- Sentient’s partner SDIC is well placed to provide additional experience in integrated power project execution and operation which increases African Energy’s credibility as a developer of reliable base load power projects.

- African Energy’s coal inventory will increase to 3.8 billion tonnes of published Measured, Indicated and Inferred resources, providing a portfolio of strategic scale that is more attractive to development partners for large scale export operations.

- The addition of Mmamantswe to Sese provides African Energy with a diversity of location and multiple development opportunities for both power generation and coal export projects

- The addition of Mmamantswe to Sese provides African Energy a diversity of location and multiple development opportunities for both power generation and coal export projects.

Mmamantswe Coal Project

The Mmamantswe Coal Project is in south-eastern Botswana, and comprises a Measured and Indicated Resource of 1.3 billion tonnes of thermal coal, including 895 million tonnes of Probable Reserves.

A 2009 Scoping Study completed by SRK concluded that a 10 million tonnes per annum open-pit mining operation could produce 2.4 million tonnes per annum of washed export coal (22MJ/kg, <20% ash) and 2.1 million tonnes per annum of middlings suitable for power station fuel (15.3MJ/kg, 38% ash) at a ROM (run-of-mine) cash cost of $9.10 per tonne.

An EIA was approved for the project by the Government of Botswana in October 2012.

Advanced discussions with global strategic groups

AFR is known to be in advanced discussions with several global strategic groups to invest directly into Sese Power (Pty) Ltd (wholly owned special purpose vehicle for the Sese Integrated Power Project). A successful outcome would provide working capital to take theSese Integrated Power Project through to financial close without further equity dilution for African Energy shareholders.

Notably for investors, the Sese coal mine will be one of the largest and lowest cost coal producers in Africa with railway within 25 kilometres of the Sese deposit provides access to Indian Ocean ports.

Coal is still in short supply in many Asian markets to fuel power project developments holding Sese in good stead.

African Energy in transformative acquisition, Sentient Group to invest

Sun, 28 Apr 2013 22:02:00 -0400

African Energy Resources (ASX: AFR) has negotiated a strategic deal that will see the company acquire Aviva Corporation’s (ASX: AVA) 1.3 billion tonne Mmamantswe Coal Project in southeast Botswana, as well as The Sentient Group make an A$8.5 million cornerstone investment.

This is a transformative deal for African Energy that will provide the company with 3.8 billion tonnes of coal in Botswana, providing a portfolio of strategic scale that is more attractive to development partners for large-scale export operations.

As importantly, The Sentient Group – which manages over US$2.3 billion in the development of metal, mineral and energy assets globally – will become a cornerstone investor and provide African Energy with A$8.5 million in funding.

Of particular relevance to African Energy is Sentient’s long term relationship with SDIC, China’s fifth largest state owned enterprise and Sentient’s joint venture partner in SDIC Xiyang Energy Co – an integrated coal mining and power generation company operating in China.

SDIC’s experience in integrated coal and power projects has the potential to boost delivery capability of African Energy’s Sese Integrated Power Project, thereby accelerating negotiations for power purchase agreements currently underway.

Sentient’s current investment portfolio includes projects in power generation, energy storage, potash, and base, precious and ferrous metals mining, covering countries as diverse as China, Brazil, Canada, Papua New Guinea, Finland, Australia, Kenya and Botswana.

Consideration for the acquisition of the Mmamantswe Coal Project is $3.5 million, with the deal subject to Aviva shareholder approval and certain other conditions precedent.

On completion of these transactions, African Energy will have secured the full rights to 3.8 billion tonnes of coal in Botswana, and increased its working capital to about $6 million.

Cornerstone investment

Sentient will immediately subscribe for 41,666,667 shares at $0.12 each to raise an initial $5 million.

Upon formal acquisition of the Mmamantswe Coal Project, Sentient will subscribe for a further 29,167,667 shares at $0.12 each to raise a further $3.5 million.

Once the full subscription is complete, Sentient will hold around 17.5% and will be the largest shareholder in African Energy.

Mmamantswe Project

The Mmamantswe Project comprises a Measured and Indicated Resource of 1.3 billion tonnes of thermal coal, including 895 million tonnes of Probable Reserves.

A 2009 Scoping Study completed by SRK concluded that a 10 million tonne per annum open pit mining operation could produce 2.4 million tonnes per annum of washed export coal (22MJ/kg, <20% ash) and 2.1 million tonnes per annum of middlings suitable for power station fuel (15.3MJ/kg, 38% ash).

This could be achieved at a run of mine cash cost of $9.10 per tonne for a total capital cost of $350 million on an owner-operated basis.

An EIA was approved for the project by the Government of Botswana in October 2012, and an 8 gigalitre per year water borefield has been delineated and secured for the project.

This provides sufficient water for mining and processing and for a 300 megawatt mine-mouth power station.

To date Aviva has invested about $12 million in the project.

The Mmamantswe Project lies within prospecting licence PL69/2007, covering an area of 454 square kilometres.

Aviva is earning a 90% interest in the project and is currently negotiating with the owners of PL69/2007 to acquire 100% rights to the project and terminate the joint venture.

PL69/2007 will then be transferred into Mmamantswe Coal (Pty) Ltd, Aviva’s wholly owned Botswana subsidiary.

Acquisition terms

African Energy has agreed to acquire all of the outstanding shares in Botswana Energy Solutions, a BVI registered company wholly owned by Aviva and the sole shareholder of Mmamantswe Coal (Pty) Ltd.

Conditions precedent to the acquisition are:

- Mmamantswe Coal (Pty) Ltd will become the registered holder of 100% of PL69/2007 by no later than 26 July 2013;
- Completion of legal and technical due diligence by 3 May 2013 to the satisfaction of African Energy at its sole discretion;
- African Energy raising the necessary funds to purchase the project;
- Execution of the formal binding share sale agreement, the key terms of which are stipulated in the binding term sheet; and
- Approval of the transaction by Aviva’s shareholders at an Extraordinary General Meeting expected to be convened in June.

Analysis

This is a transformative deal for African Energy that provides African Energy with a substantive cornerstone institutional investor in Sentient with a large financial capability and project development focus.

Adding to the project mix is Sentient’s partner SDIC, China’s fifth largest state owned enterprise which has substantive experience in integrated power project execution and operation, which increases African Energy’s credibility as a developer of reliable base load power projects.

African Energy’s coal inventory will increase to 3.8 billion tonnes of published Measured, Indicated and Inferred Resources, providing a portfolio of strategic scale that is more attractive to development partners for large scale export operations.

The addition of Mmamantswe to Sese provides African Energy with a diversity of location and multiple development opportunities for both power generation and coal export projects.

Additionally, the placement to Sentient will propel African Energy’s working capital to around $6 million.

Today’s deal is value accretive, the advanced discussions with several global strategic groups to invest directly into Sese Power (Pty) Ltd, if successful would provide working capital to take the Sese Integrated Power Project through to financial close without further equity dilution for African Energy shareholders, which would be a coup.

Today's deal provides a strong platform for African Energy to add value for shareholders from the company’s current market cap. of $41.3 million, presenting an opportunity for investors ahead of strong expected newsflow.

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African Energy Resources: Canaccord places $1.04 target on Integrated Power Project metrics

Wed, 29 Aug 2012 00:17:00 -0400

African Energy Resources (ASX: AFR) has received a buy recommendation and a $1.04 target from Canaccord. African Energy shares are currently trading intra-day today at around $0.20.

The following is an extract from the report.

Valuation Metrics

We have chosen to value AFR largely on the basis of two parts, the first being AFR’s assumed future interest in the Sese Integrated Power Project and the second being the development of its wholly owned Sese Export Project.

However we have also placed some nominal value on the Company’s Zambian coal projects and uranium portfolio.

Sese Integrated Power Project

For the Sese Integrated Power Project, ahead of the announcement of feasibility study results and definitive financing decisions, we have chosen to use a conservative approach. For our initial valuation exercise we have assumed that AFR will retain a 20% free carried interest in the Sese Integrated Power Project.

This we believe is a mid-range case scenario what the Company should achieve, through negotiation with the incoming investing party.

Sese Powering-Up to Become an Integrated Supplier of Electricity & Export Coal

INVESTMENT PERSPECTIVE

AFR is about unlocking the substantial wealth generating potential from Sese, a 100% owned, large, 2.5 Bt shallow thermal coal deposit, strategically located within 20 km of under-utilised rail infrastructure in Eastern Botswana.

However, whilst the development of a large thermal coal export business, eventually exporting 20-30 Mtpa is part of AFR’s growth plan (starting with a 2 Mtpa operation in 2014), exporting coal is not the Company’s sole focus. Generating mine mouth power is also a major short- to medium-term business opportunity.

Noting the urgent requirement for additional power generation in southern Africa, following Eskom South Africa’s decision to start limiting or even halting power exports to its neighbours in response to its own power shortages, and recognising Sese’s strategic location, AFR has initiated a plan to develop an integrated electricity generation project at Sese.

The plan is for the Company to attract a credit rated offtaker to co-develop a 300 MW power station and 1.5 Mtpa captive mine.

With the sheer size of the Sese coal resource not even impacted by the proposed development of the first 300 MW, and further regional electricity demand, it is envisaged that this first plant will be the first of many, which with the development of a large export business will provide future multiple revenue streams.

With the recent signing of a MOU with a credit rated southern African utility and power offtaker, this plan is now rapidly moving from concept to reality.

KEY INVESTMENT HIGHLIGHTS

New Resource Upgrade

The new estimate now places 94% of the 2.5 Bt Sese resource in the Measured and Indicated categories, significantly de-risking the resource base and allowing the ongoing DFS and PFS into the Integrated Power project to use these figures with a high level of confidence.

MOU Signed with Reputable southern African Utility

Recent signing of MOU with a credit rated southern African offtake utility group looking into the development of a 300 MW mine mouth power station at Sese provides the market confidence of the Integrated Power Project’s advancement.

Coal Mine DFS to be Completed Year End

A DFS currently underway looking into the various scenarios of delivering optimised low cost coal to both an Integrated Power Project and an Export Project is expected to be completed by the end of 2012.

300 MW Power Plant PFS to be Completed by Q3 2012

A PFS being undertaken by reputable independent power engineering group looking into the development of the 300 MW station is due for completion in Q3 2012.

Export Plan Underway

Recent washing and boiler trials have demonstrated Sese coal to be a quality thermal coal suitable for export markets. Studies and discussions with Botswana Rail and potential offtakers into the commencement of export shipments by 2014 are underway.

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African Energy Resources demonstrates Sese coal’s suitability for industrial boilers in trial

Tue, 21 Aug 2012 20:54:00 -0400

African Energy Resources (ASX: AFR) has successfully demonstrated the suitability of coal from its Sese Thermal Coal Project in Botswana to be used as fuel for industrial boilers in a recently completed trial.

A 15,000 tonne bulk sample was excavated from part of the Measured Resource earlier this year and has provided coal for beneficiation test work, export trials and combustion testing.

Sixty tonnes of raw coal from the bulk sample was recently trucked to South Africa where it was crushed and processed through Gecko Mineral Processing’s pilot‐scale air‐separation plant to provide information on air plant performance and a beneficiated product for combustion testing in boilers.

The processed coal was screened to “peas”, a 6 by 25 millimetre sized product, and three random samples sent to ALS Chemex Witlab facility for coal quality analysis.

Bagged samples of the sized coal were sent to GH Boiler and Energy Services in Johannesburg for the combustion trial.

Sized Sese coal was fed onto the boiler’s chain‐grate by means of an overhead hopper, and introduced to the boiler as a replacement for the boiler’s standard 25.5 megajoules per kilogram feedstock.

The following key observations were made:

- Sese coal was observed via a peephole and was seen to ignite and combust well.

- The process and efficiency was monitored throughout the trial and indicated that Sese coal combusted favourably and successfully with no adverse impact on the boiler.

- The boiler was able to generate heat and steam satisfactorily using Sese coal.

- Stack emissions were noted and recorded as clear throughout the test.

- Soft and friable clinker was seen at the back‐end of the chain‐grate and was not detrimental to the boiler performance or ash recovery.

Importantly, all of these observations confirm that Sese coal is therefore compatible with and suitable for use in industrial chain‐grate boilers.

Sese Measured Resource

Just last week African Energy defined an initial Measured Resource for its Sese Project of 651 million tonnes following resource modelling by the company’s consultants.

This means around 94% of the Sese Project’s total 2,517 million tonne Resource is now in the higher confidence Measured and Indicated categories.

The Measured Resource is contained in two blocks – Block-B and Block-C.

Coal in the Block‐B Measured Resource is of interest for the Sese Export Project due to its potential for low strip ratio, higher in‐situ calorific value and higher washing yields than other parts of the deposit.

Block-C coal is favoured as the source of fuel for the Sese Integrated Power Project due to its proximity to existing infrastructure and proximity to solid basement for the power station footings.

This coal can be used as a raw coal feedstock for a power station, or can be washed to produce an export product and a middling for use in power stations.

Botswana coal

Botswana contains one of the world’s largest undeveloped thermal coal provinces, and Sese is one of the 15 delineated coal resources in the country.

Studies have demonstrated that Sese has the potential for the lowest run of mine operating costs in the country.

Botswana’s Coal Roadmap, and African Energy’s business plan, is focused on delivering three core businesses – export coal, export electricity and domestic electricity.

Importantly, the east coast of Africa is considered an ideal location from which Botswana’s coal may be ultimately exported to Asian markets.

The market for Sese coal includes domestically with existing industrial customers and nearby markets, with this demand set to grow as new customers enter the market as new mines and businesses develop.

There is also a growing regional market in Southern Africa, with the Power Pool facing net regional electricity generating deficit as Eskom exports scale back.

Then there are the export markets where demand remains high, especially in India, with few undeveloped coal provinces capable of meeting this demand.

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African Energy Resources director increases holding

Wed, 20 Jun 2012 01:35:00 -0400

African Energy Resources (ASX: AFR) non-executive director Phil Clark has increased his interest in the company as it progresses the Sese Thermal Coal Project.

Clark has taken up a further 115,000 shares in African Energy through his super fund, increasing his indirect holding to 265,000 shares.

Total consideration of $21,900 was paid for the shares.

Earlier this month African Energy secured a memorandum of understanding with a potential offtaker for the electrical output from the company’s proposed 300 megawatt coal fired power station at the Sese Thermal Coal Project in Botswana.

The agreement, while non-binding, provides an opportunity for the credit‐rated national electrical utility, which importantly is a member of the Southern African Power Pool, to make a full assessment of the Sese Power Project.

This assessment could lead to binding agreements to jointly develop and finance the project.

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African Energy Resources gains momentum at Sese with potential offtake agreement

Tue, 05 Jun 2012 21:59:00 -0400

African Energy Resources (ASX: AFR) is demonstrating the strength of its Sese Thermal Coal Project in Botswana, securing a memorandum of understanding with a potential offtaker for the electrical output of the company’s proposed 300 megawatt coal‐fired power station.

The coal for the Sese Power Project will come from the company’s adjacent Sese Coal Project, which has a total Indicated and Inferred Resource of 2.6 billion tonnes.

The agreement, while non-binding in nature, provides an opportunity for the credit‐rated national electrical utility, which importantly is a member of the Southern African Power Pool, to make a full assessment of the Sese Power Project which could lead to binding agreements to jointly develop and finance the project.

Part of the assessment process will involve the negotiation of key commercial terms for a Power Purchase Agreement, Joint Development Agreement and other project contracts.

Markets for Botswana coal

The market for Sese coal includes domestically with existing industrial customers and nearby markets, with this demand set to grow as new customers enter the market as new mines and businesses develop.

There is also a growing regional market in Southern Africa, with the Power Pool facing net regional electricity generating deficit as Eskom exports scale back.

Then there are the export markets where demand remains high, especially in India, with few undeveloped coal provinces capable of meeting this demand.

Milestones on the path to production

The path to production timeline has African Energy focused on completing a Bankable Feasibility study by the end of 2012, along with mining licence approvals and financing negotiations. The next step will then be the commencement of coal sales from stage one in mid-2013.

Stage one will comprise an initial 1 to 2 million tonnes per annum.

In April, African Energy completed a milestone rail delivery of coal from Sese to Maputo in Mozambique, demonstrating that the transport of Sese coal via rail to the east coast of Africa is possible using existing infrastructure.

The defining factor for Sese is that the entire deposit is amenable to open-cut strip mining, with low risk and low costs, and mining blocks are around 500 metres by 200 metres.

The Bankable Feasibility Study is evaluating a mining operation of up to 5 million tonnes per annum of coal, with the option for an associated mine‐mouth power station of up to 600 megawatts.

The Sese Coal Project hosts over 2.5 billion tonnes of coal at the project in the Indicated category, after more than 95% of the in-situ resource was classified.

Part of the resource is now targeted to be moved into the higher confidence Measured category in the June 2012 quarter, which will be from Blocks B and C.

Analysis

With the market valuation re-tracing to the current $69 million of late, this is very light for a company with the size of resource of Sese; with near term initial coal production and upside from next stages that incorporate higher production levels. In fact, we see Sese as a "must do" imperative if power shortages in southern Africa are not to worsen.

Current prices on offer for African Energy provide a cheap entry level for medium to long term investors.

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African Energy Resources noticed by investors, ASX issues price query

Tue, 29 May 2012 00:59:00 -0400

African Energy Resources (ASX: AFR) has come onto the radar of investors with a 30.5% share price increase to A$0.235 intra-day today, up from an $0.18 closing price a week earlier.

The company responded to the ASX saying it is not aware of any material information that has not been disclosed to the market, which may explain the sudden investor interest.

African Energy is on its way to the commercial delivery of coal from the company’s Sese Thermal Coal Project in Botswana, with negotiations beginning earlier this month.

In April, the company completed a milestone trial rail delivery of 25 tonnes of coal, demonstrating that the transport of Sese coal via rail to the east coast of Africa is possible using existing infrastructure.

The company will negotiate with Botswana to establish an economic rail tariff for the transport of coal from the project to Maputo in Mozambique.

A Pre-Feasibility Study is expected to be completed by the end of June this year while a Bankable Feasibility Study remains on track for delivery by the end of 2012, along with mining licence approvals and financing negotiations.

The next step will then be the commencement of coal sales from stage one in mid-2013.

The Sese project hosts over 2.5 billion tonnes of coal at the project in the Indicated category, and is amenable to open-cut strip mining, with low risk and low costs.

Part of the resource is now targeted to be moved into the higher confidence Measured category in the June 2012 quarter.

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African Energy Resources unearths new coal discovery in Zambia

Thu, 10 May 2012 02:06:00 -0400

African Energy Resources (ASX: AFR) is adding to its African coal inventory with a new discovery at the Sinazongwe prospect in Zambia close to existing coal mines.

Multiple coal seams were intersected in all of the completed core holes and, importantly, these coal seams are open along strike and down dip.

Raw coal calorific values returned ranged from 10 to 26 megajoules per kilogram.

Highlighting the potential for coking coal properties, there was an extensive presence of vitrinite bands.

In mid-2011, reconnaissance exploration identified coal bearing sediments with a strike length of about 10 kilometres.

These sediments are mapped by a geological survey as the extension of the stratigraphy that hosts the Maamba Colliery and the Collum Coal Mine, Zambia’s only producing coal deposits.

Next steps

African Energy now plans to test the coking properties of the coal as well as undertake washing yield analysis.

This work will determine if the coal has the potential for one or two products – a higher value coking fraction and a middling for use as a power station fuel.

Sese – path to production

Meanwhile, over at the Sese Thermal Coal Project in Botswana, African Energy recently completed a milestone rail delivery of coal to Maputo.

The significance of this is that the company has demonstrated that the transport of Sese coal via rail to the east coast of Africa is possible using existing infrastructure.

The trial shipment is a huge step in African Energy’s and Botswana's ambitious plans to fully exploit its coal resources with exports and power plants as the primary targets.

Importantly, the east coast of Africa is considered an ideal location from which Botswana’s coal may be ultimately exported to Asian markets.

The market for Sese coal includes domestically with existing industrial customers and nearby markets, with this demand set to grow as new customers enter the market as new mines and businesses develop.

There is also a growing regional market in Southern Africa, with the Power Pool facing net regional electricity generating deficit as Eskom exports scale back.

Then there are the export markets where demand remains high, especially in India, with few undeveloped coal provinces capable of meeting this demand.

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African Energy Resources to start talks on commercial delivery of coal to Maputo

Thu, 03 May 2012 01:29:00 -0400

African Energy Resources (ASX: AFR) is about to start negotiations with Botswana to establish an economic rail tariff for the transport of coal from its Sese Thermal Coal Project in the country to Maputo in Mozambique.

The company had last month completed a milestone trial rail delivery of 25 tonnes of coal, demonstrating that the transport of Sese coal via rail to the east coast of Africa is possible using existing infrastructure.

Besides the talks with Botswana’s Ministry of Transport and Communications and Botswana Railways, which will include discussion on improving efficiency on the rail network, African Energy has also engaged specialist rail and port consultants to evaluate options to increase the capacity on the existing infrastructure.

As part of the process, the company has made a written submission to Grindrod, operators of the Matola Coal Terminal in Maputo, seeking an allocation for coal exports under their terminal expansion plan.

Meanwhile, members of African Energy’s executive management team have embarked on a roadshow through India and China to promote the Sese project to potential strategic development partners.

The Botswana Ministry of Minerals, Energy and Water Affairs (MMEWR) has also started assessing the first of its coal prospecting licence applications, Foley West.

This covers the area immediately to the north and south of the Sese project.

A pre-feasibility study for the project is expected to be completed by the end of June this year while a bankable feasibility study remains on track for delivery by the end of 2012, along with mining licence approvals and financing negotiations. The next step will then be the commencement of coal sales from stage one in mid-2013.

The defining factor for Sese is that the entire deposit is amenable to open-cut strip mining, with low risk and low costs, and mining blocks are around 500 metres by 200 metres.

The bankable feasibility study is evaluating a mining operation of up to 5 million tonnes per annum of coal, with the option for an associated mine‐mouth power station of up to 600 megawatts.

The Sese Coal Project hosts over 2.5 billion tonnes of coal at the project in the Indicated category, after more than 95% of the in-situ resource was classified.

Part of the resource is now targeted to be moved into the higher confidence Measured category in the June 2012 quarter, which will be from Blocks B and C.

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African Energy Resources director increases shareholding after first delivery of coal to Maputo

Tue, 17 Apr 2012 02:11:00 -0400

African Energy Resources (ASX: AFR) non-executive director Michael Curnow has increased his stake in the company to 677,991 shares.

Curnow purchased an additional 33,436 shares on-market for a consideration of $9,149, providing an average entry price of around $0.27.

In addition to his fully paid ordinary shares, Curnow also holds 899,736 unlisted options exercisable at $0.31 on or before 30 June 2012.

African Energy is meeting milestones at pace and last week completed its first rail delivery of coal from its Sese Thermal Coal Project in Botswana to Maputo in Mozambique.

The significance of this is that the company has demonstrated that the transport of Sese coal via rail to the east coast of Africa is possible using existing infrastructure.

African Energy’s trial shipment is a huge step in the company's and Botswana's ambitious plans to fully exploit its coal resources with exports and power plants as the primary targets.

Importantly, the east coast of Africa is considered an ideal location from which Botswana’s coal may be ultimately exported to Asian markets.

The market for Sese coal includes domestically with existing industrial customers and nearby markets, with this demand set to grow as new customers enter the market as new mines and businesses develop.

African Energy is confident the regional industrial demand can absorb 1 million tonnes per annum from Sese.

There is also a growing regional market in Southern Africa, with the Power Pool facing net regional electricity generating deficit as Eskom exports scale back.

Then there are the export markets where demand remains high, especially in India, with few undeveloped coal provinces capable of meeting this demand.

African Energy Resources in milestone delivery of coal to Maputo

Thu, 12 Apr 2012 23:58:00 -0400

African Energy Resources (ASX: AFR) has completed a milestone rail delivery of coal from its Sese Thermal Coal Project in Botswana to Maputo in Mozambique.

The significance of this is that the company has demonstrated that the transport of Sese coal via rail to the east coast of Africa is possible using existing infrastructure.

A 25 tonne parcel of Sese coal was loaded into a Botswana Railways freight wagon at the Francistown railway station on 3 April, and dispatched to Maputo via Bulawayo and southern Zimbabwe.

The coal wagon arrived at Grindrod’s Matola coal terminal in Maputo on Saturday, 7 April.

Minister of Transport and Communications, Nonofo Molefhi said that it was the first consignment of coal to be transported from a local mine in Botswana and exported to the Mozambican port where other opportunities are available.

Markets for Botswana coal

Importantly, the east coast of Africa is considered an ideal location from which Botswana’s coal may be ultimately exported to Asian markets.

The market for Sese coal includes domestically with existing industrial customers and nearby markets, with this demand set to grow as new customers enter the market as new mines and businesses develop.

There is also a growing regional market in Southern Africa, with the Power Pool facing net regional electricity generating deficit as Eskom exports scale back.

Then there are the export markets where demand remains high, especially in India, with few undeveloped coal provinces capable of meeting this demand.

Rapid progress

Highlighting the rapid progress African Energy is making towards the development of Sese, the company has already appointed Industrial Coal Africa (ICA) as coal marketing manager to oversee the marketing, sales and logistics services for the project.

ICA has previously serviced Riversdale Mining, which owned and operated the Zululand Anthracite Colliery prior to the company being taken over by Rio Tinto (ASX: RIO) last year.

The colliery produces high quality anthracite with an annual saleable tonnage of around 750,000 tonnes.

Milestones on the path to production

The path to production timeline has African Energy focused on completing a Bankable Feasibility study by the end of 2012, along with mining licence approvals and financing negotiations. The next step will then be the commencement of coal sales from stage one in mid-2013.

The defining factor for Sese is that the entire deposit is amenable to open-cut strip mining, with low risk and low costs, and mining blocks are around 500 metres by 200 metres.

The Bankable Feasibility Study is evaluating a mining operation of up to 5 million tonnes per annum of coal, with the option for an associated mine‐mouth power station of up to 600 megawatts.

The Sese Coal Project hosts over 2.5 billion tonnes of coal at the project in the Indicated category, after more than 95% of the in-situ resource was classified.

Part of the resource is now targeted to be moved into the higher confidence Measured category in the June 2012 quarter, which will be from Blocks B and C.

Comment

With an initial 1-2Mtpa Stage 1 coal production operation planned in 2013, today's news is significant in Sese's and African Energy's evolution. While it may not get the market attention it deserves, it is a milestone nonetheless and a pathway for product to be railed to the coast with infrastructure already in place.

With the market valuation re-tracing to current $88 million of late, this is very light for a company with the size of resource of Sese; with near term initial coal production and upside from next stages that incorporate higher production levels. In fact, we see Sese as a "must do" imperative if power shortages in southern Africa are not to worsen.

Current prices on offer for AFR provide a cheap entry level for medium to long term investors.

African Energy Resources ticks the boxes as it moves closer to development

Thu, 29 Mar 2012 01:02:00 -0400

African Energy Resources (ASX: AFR) is rapidly progressing operations at its Sese Thermal Coal Project in Botswana as it heads towards development.

The company has completed the excavation of a 15,000 tonne bulk sample of coal from a 320 metre long box-cut.

A site has been identified in South Africa to undertake the first combustion trials of Sese coal in an industrial boiler.

This trial is being undertaken to confirm the combustion characteristics of Sese coal for typical industrial users that form part of African Energy’s regional target market.

This initial trial is a key step before undertaking further trials in Botswana and in neighbouring countries such as South Africa, Zambia and Namibia.

Coal Marketing Manager

African Energy has appointed Industrial Coal Africa (ICA) as coal marketing manager to oversee the marketing, sales and logistics services for the Sese Coal Project.

ICA has previously serviced Riversdale Mining, which owned and operated the Zululand Anthracite Colliery prior to the company being taken over by Rio Tinto (ASX: RIO) last year.

The colliery produces high quality anthracite with an annual saleable tonnage of around 750,000 tonnes.

Export Trials

A trial shipment of Sese coal will be shipped to the Matola Coal Terminal at the east coast port of Maputo in Mozambique in the coming weeks, under an agreement with Botswana Rail Corporation.

During the past six months African Energy has been assessing options for exporting coal from Botswana to ports on the east and west coasts of Africa using the existing rail network that passes within 25 kilometres of the Sese Coal Project.

The trial shipment is expected to help determine the freight and logistical issues associated with delivering Sese coal to a port.

Community Consultation

African Energy has received a positive response to its Sese Coal Project proposal in community consultation meetings held in February. No material adverse issues were raised by the community.

Feasibility Studies

A Pre‐Feasibility Study is scheduled to be completed by the end of June and African Energy is on track to deliver a Bankable Feasibility Study by December.

The Bankable Feasibility Study is evaluating a mining operation of up to 5 million tonnes per annum of coal, with the option for an associated mine‐mouth power station of up to 600 megawatts.

The Sese Coal Project hosts over 2.5 billion tonnes of coal at the project in the Indicated category, after more than 95% of the in-situ resource was classified.

Part of the resource is now targeted to be moved into the higher confidence Measured category in the June 2012 quarter, which will be from Blocks B and C.

African Energy Resources managing director Frazer Tabeart answers questions at One2One Investor Forum

Thu, 15 Mar 2012 19:00:00 -0400

African Energy Resources’ (ASX: AFR) main focus is the Sese coal project, located 50 kilometres to the south of the mining hub of Francistown in eastern Botswana.

Frazer Tabeart, managing director, fielded answers during Question Time at last night’s Proactive Investors’ 'Stars in 2012 Series' in Sydney, Wednesday 14th March.

The presentation on the night can be ACCESSED HERE.

The Sese Coal Project has an Indicated Resource containing 2.5 billion tonnes of coal and is amenable to open cut mining.

Part of the resource is now targeted to be moved into the higher confidence Measured category in the June 2012 quarter, which will be from Blocks B and C.

African Energy is currently focused on completing a Bankable Feasibility study by the end of 2012, along with mining licence approvals and financing negotiations, ahead of first coal sales from stage one in mid-2013.

Question from the audience

What do you see as major milestone’s for investors to look for with African Energy Resources over the next six to 12 months?

Frazer Tabeart

I guess in an even shorter term than that I think over the next six weeks or so we hope to be in a position to announce progress on the first 300 megawatt power station.

We would also expect within three months to be putting out a Measured Resource update and then some information on the first part of the Feasibility Study also in about three to four months’ time.

Moving out a little bit by the end of the year we should be able to announce the full results of the Feasibility Study.

We should hopefully be in a position to announce the successful power purchase agreement and then that puts us in a position to finance the power station as well as the mine. So quite a lot, all geared towards development. There is potential aside for announcements on reaching marketing agreements for regional sales of coal.

Question from the audience

The supply gap gets smaller for Namibia but for Zambia it gets bigger as the time goes up to 2025?

Frazer Tabeart

What this takes into account is the new generating capacity that’s been put in places or plant to be put in place in countries such as Zambia, which is why Zambia increases. In Namibia their one existing coal fired power station is on its last legs so that is actually going to go offspring.

So Namibia’s got a serious structural problem with our electricity generation and they don’t have coal in country.

So they’ve either got to build a new power station for coal and import coal, they can find an alternative supply of electricity and import electricity or they can develop the Kudu gas field and the reason this excludes the Kudu gas field is to develop that gas field, the capital costs are so high they’d have to generate far more electricity than is actually required in their region and which could reasonably supplied through their network. So that’s not really a short term option either.

Question from the audience

How would you describe the quality of the Sese coal? You said in the early part of your talk you referred to it as a lower quality of coal.

Frazer Tabeart

Yeah it’s what would be referred to as sub-spec coal in the market. It’s not the same quality coal as Newcastle grade coal.

Our washed coal which will be exported will be in the range of 5,000 to 5,500 kilocalories per kilogram. Newcastle grade coal is 6,300 by comparison.

Our export quality coal is clearly not the same as Newcastle. You get obviously a lower price for your product as a result of that, but it is the sort of coal which is now more widely traded than any other coal and the reason is the supply of Newcastle coal is dwindling, it’s expensive and India’s not prepared to pay $130 a tonne for coal.

So they’ve made the decision to go for lower quality coal and they just burn more of it in their power stations. It then becomes an ash management issue and a logistics issue, but they get a cheaper result at the end of the day.

Very similar quality coal to the biggest coal basin in the world, which is Powder River Basin in America and that coal is now being exported to Europe.

African Energy Resources’ stocks jump 15% as company moves to pre-development at Sese

Thu, 09 Feb 2012 00:20:00 -0500

African Energy Resources’ (ASX: AFR) shares went against the ASX trend today, gaining 15% to $A0.46, with nearly 4.3 million shares changing hands as of 3.33pm (AEDT).

The company has been on an upwards share trajectory since mid-December last year as it moves from exploration to pre-development at its Sese Thermal Coal Project in Botswana.

Last week African Energy Resources upgraded the Sese resource to over 2.5 billion tonnes of coal in the Indicated category, after more than 95% of the in-situ resource was classified.

Part of the resource is now targeted to be moved into the higher confidence Measured category in the June 2012 quarter, which will be from Blocks B and C.

African Energy is currently focused on completing a Bankable Feasibility study by the end of 2012, along with mining licence approvals and financing negotiations, ahead of first coal sales from stage one in mid-2013.

The defining factor for Sese is that the entire deposit is amenable to open-cut strip mining, with low risk and low costs, and mining blocks are around 500 metres by 200 metres.

African Energy Resources hits 2.5 billion tonnes Indicated coal Resource in Botswana

Wed, 01 Feb 2012 22:23:00 -0500

African Energy Resources' (ASX: AFR) latest resource upgrade provides further potential for a 30 million tonne per annum thermal coal production operation for over 100 years, starting in 2013.

The project now hosts over 2.5 billion tonnes of coal at the project in the Indicated category, after more than 95% of the in-situ resource was classified.

Part of the resource is now targeted to be moved into the higher confidence Measured category in the June 2012 quarter, which will be from Blocks B and C.

Coal product options

Currently the Lower Main Seam accounts for 61% of the total 2,626 million tonne resource, importantly containing coal which is suitable for washing to create an export quality product (up to 5,550 Kcal/kg).

Providing options for African Energy, the Upper Main Seam coal can be washed, or blended with the Lower Main Seam middlings to make a product which is suitable for use as power station fuel. Full Seam raw coal is also suitable as a power station fuel.

The coal occurs in one main seam which averages 14 metres thickness, is close to surface and which is expected to be amenable to low strip-ratio open pit mining.

Milestones on the path to production

The path to production timeline has African Energy focused on completing a Bankable Feasibility study by the end of 2012, along with mining licence approvals and financing
negotiations. The next step will then be the commencement of coal sales from stage one in mid-2013.

The defining factor for Sese is that the entire deposit is amenable to open-cut strip mining, with low risk and low costs, and mining blocks are around 500 metres by 200 metres.

The layout of exploration box-cut for the bulk sample has been designed to be the first access ramp for Stage one coal-mine, which reduces the development timeframe for the project construction.

Markets for Botswana coal

The market for Sese coal includes domestically with existing industrial customers and nearby markets, with this demand set to grow as new customers enter the market as new mines and businesses develop.

There is also a growing regional market in Southern Africa, with the Power Pool facing net regional electricity generating deficit as Eskom exports scale back.

Then there are the export markets where demand remains high, especially in India, with few undeveloped coal provinces capable of meeting this demand.

Analysis

With the latest resource upgrade, AFR is valued on an EV/Resource tonnes well under its peer averages. Recent pull-back in market valuation provides an opportunity for savvy investors to re-load on AFR. Sese is potentially in the vanguard to become the largest coal project in Botswana and also one of lowest unit cost coal projects in Africa, once developed.

African Energy Resources bulks up thermal coal sampling as large scale testing draws nearer

Sun, 29 Jan 2012 19:45:00 -0500

African Energy Resources (ASX: AFR) is drawing close completing the excavation of a bulk sample of coal at the Sese Thermal Coal Project, with large scale testing to follow.

The Sese project, in northeast Botswana, has an initial JORC Resource of 2.73 billion tonnes of coal. A Bankable Feasibility Study and Environmental Impact Assessment are underway to evaluate a mining operation of up to 5 million tonnes per annum of coal.

About 15,000 tonnes of coal will be stockpiled, from both the upper and lower sections of the Sese Main Seam, for the bulk sample.

Coal from the bulk sample will be used for a series of large scale tests, including:

- Export trials to test the capacity and freight tariffs using the existing rail/port infrastructure
- Combustion tests for power station boilers to assist negotiations of coal sales agreements to power station customers
- Confirmation of the washing yields derived from previous testing of slimline drill core samples. This will confirm the product specification ranges of washed coal for sale
- An assessment of the coal’s suitability for coal to liquids processing which if favourable will be followed by a large scale test programme utilising 500 tonnes or more coal
- Samples of coal from the bulk sample will be made available to potential industrial customers to undertake their own testwork.

Other testwork to be carried out will be determined by the Bankable Feasibility Study.

A 60 tonne batch of coal has been sent to a processing facility in South Africa for processing.

The Sese project includes one prospecting licence and a number of prospecting licence applications, close to rail, road and power infrastructure.

African Energy Resources chairman continues on market share purchases

Tue, 17 Jan 2012 01:30:00 -0500

African Energy Resources (ASX: AFR) executive chairman Alasdair Cooke has topped up his shareholding in the company with the purchase of 57,100 shares.

Cooke acquired the additional shares for a consideration of A$14,390, providing an average entry price of $0.25.

The latest purchase brings Cooke’s total direct interest in African Energy to nearly 12.2 million shares.

In November last year bulk sampling work began at the company’s 2.7 billion tonne Sese Coal Project in Botswana.

Local contractor G&S Projects was mobilised to the site in October to obtain a bulk sample of 10,000 tonnes of coal to provide material for ongoing test work.

The bulk sample is expected to be delivered in early 2012.

African Energy Resources chairman increases interest by 850,000 shares

Tue, 03 Jan 2012 22:50:00 -0500

African Energy Resources (ASX: AFR) executive chairman Alasdair Cooke has been buying up big in the company over recent weeks, acquiring 850,000 shares in December.

Cooke purchased an initial 350,000 shares on market at a cost of about $0.28 per share for a total consideration of $100,575 on December 9.

This was followed with a further 500,000 shares purchased on market between December 20 and 22, at about $0.23 per share for a total of $118,735.

These acquisitions bring Cooke’s total direct interest in African Energy to 12.1 million shares, along with more than 2 million unlisted options.

Cooke also has indirect holdings of more than 15 million shares.

In November 2011 bulk sampling work began at African Energy’s 2.7 billion tonne Sese Coal Project in Botswana, with the aim of extracting a bulk sample of 10,000 tonnes of coal to provide material for ongoing test work.

Local contractor G&S Projects was mobilised to the site in October and the bulk sample is expected to be delivered in early 2012.

African Energy Resources chairman tops-up shareholding

Sun, 04 Dec 2011 18:42:00 -0500

African Energy Resources (ASX: AFR) executive chairman Alasdair Cooke acquired 200,000 shares on market at $0.281 per share on 29 and 30 November .

The shares were purchased for a consideration of $56,302 and Cooke now holds 11,281,389 ordinary shares.

On November 21 African Energy Resources was rated a speculative buy by Helmsec Global Securities, based on the company’s large near-surface Sese coal project, which has been valued at $1 per share.

In September, results from a Concept Study confirmed the technical and commercial viability of the project, with robust cash flows and strong operating margins a possibility.

A 2.7 billion tonne coal resource has been identified at Sese, with a Feasibility Study for initial development underway.

African Energy Resources promise highlighted in Helmsec report

Sun, 20 Nov 2011 17:54:00 -0500

African Energy Resources (ASX: AFR) has been rated a speculative buy by Helmsec Global Securities, based on the company’s large near-surface Sese coal project.

In September, results from a Concept Study confirmed the technical and commercial viability of the project, with robust cash flows and strong operating margins a possibility.

A 2.7 billion tonne coal resource has been identified at Sese, with a Feasibility Study for initial development underway.

The following is an excerpt from Helmsec’s report.

AFR has a massive, near surface coal resource sitting in the centre of a chronic regional power shortage. Development of a coal mine and power station at Sese is a logical supply response to the unresolved Southern African power shortage.

A power station is one crucial leg of AFR’s four stage plans for Sese. A mine and wash plant producing coal for regional industry will come first to establish capability and key relationships. AFR is confident the regional industrial demand can absorb 1 Mtpa from Sese. From there negotiations with governments, IPPs and financiers will be made easier.

AFR’s ultimate goal for Sese is the Indian thermal coal market, which requires a new rail and port link. Extraordinary volumes and margins for coal exporters beckon, with finance standing in the way of a green light for one of two rail and port proposals.

Sese is valued here at $1.00 per African Energy share, based on early indications of future cash flows, after discounts for extensive market, estimation and finance risks.

The supply response to the power shortages in southern Africa is likely to continue to disappoint unless relatively easy options like Sese are pursued. AFR is a play on Southern Africa’s continued development, to the mining boom that is currently driving economic growth in the region, and to India’s relentless electrification drive. Helmsec reiterates a Speculative Buy recommendation.

KEY POINTS

- AFR’s 2.7 billion tonne coal resource at Sese consists of a single seam up to 26 metres thick, all of it within 80 metres of the surface. The Sese resource has been defined over 30 km of strike and up to 10 km down dip.

- In the last few years power shortages in southern Africa and the emergence of India as a major importer of thermal coal have put Botswana in position to develop its massive coal resources for the first time. Sese is potentially the largest coal project in Botswana and also potentially the 2nd lowest unit cost coal project in Africa.

- Initial wash tests indicate Sese can potentially produce a domestic power station coal product and a thermal coal product suitable for export.

- Sese is next to existing infrastructure that could support a medium scale operation delivering coal to regional customers.

- A compelling case can be made for the establishment of an Independent Power Project at Sese, supplying base load electricity to regional markets.

- The Botswana government, in partnership with neighbouring states, various private interests and development banks, has advanced two rail and port projects that would support +30 Mtpa coal exported from Sese. Botswana coal is likely to find ready markets in India.

African Energy Resources managing director ups indirect stake in company

Sun, 13 Nov 2011 22:18:00 -0500

African Energy Resources (ASX: AFR) managing director Dr Frazer Tabeart has increased his indirect shareholding in the company.

Tabeart bought 100,000 shares on-market through Revenge Holdings for a consideration of $31,341, providing an average entry price of $0.313.

African Energy Resources has begun bulk sampling work at its 2.7 billion tonne Sese Coal Project in Botswana following a Concept Study in September that confirmed the project's viability.

Robust cash flows and strong operating margins are possible under a variety of scenarios that do not require new rail and port infrastructure.

The study concluded that the project could be developed through a staged approach. An initial, up to 1 million tonnes per annum operation (Stage 1) can generate cash flows from 2013 and involves selling washed coal into domestic and regional markets.

Additional coal sales to a power station, and moderate volumes of export sales could expand Sese into a 3‐5 million tonnes per annum (Stage 2) operation.

India is considered the likely market for Sese thermal coal, with demand set to increase from 50 million tonnes per annum in 2010 to 210 million tonnes per annum by 2025.

China is also experiencing a surge in demand for the resource with thermal coal imports expected to double to 213 million tonnes by 2025.

African Energy Resources begins bulk sampling work at Sese Coal Project in Botswana

Wed, 09 Nov 2011 18:11:00 -0500

African Energy Resources (ASX: AFR) has begun bulk sampling work at its 2.7 billion tonne Sese Coal Project in Botswana following a Concept Study in September that confirmed the project's viability.

As part of the Bankable Feasibility study, the AFR has committed to extract a bulk sample of 10,000 tonnes of coal to provide material for ongoing test work.

The earlier Concept Study confirmed an initial; up to 1 million tonnes per annum (Mtpa) operation (Stage 1) can generate cash flows from 2013 and involves selling washed coal into domestic and regional markets.

Local contractor G&S Projects was mobilised to the site in October and has commenced drill and blast operations to deliver the bulk sample in early 2012.

The box‐cut has been sited and designed so that it can be expanded into a development ramp for future mining
operations.

Coal from the bulk sample will be used for a series of large scale tests, including:

- Export trials to test the capacity and freight tariffs using the existing rail/port infrastructure to

- Combustion tests for power station boilers to assist negotiations of coal sales agreements to power station customers

- Confirmation of the washing yields derived from previous testing of slimline drill core samples. This will confirm the product specification ranges of washed coal for sale

- An assessment of the coal’s suitability for coal to liquids processing which if favourable will be followed by a large scale test programme utilising 500 tonnes or more coal

- Samples of coal from the bulk sample will be made available to potential industrial customers to undertake their own testwork.

A stage 2 operation as envisaged through a BFS would refine the technical and commercial evaluation of a mining operation to deliver up to 5 million tonnes per annum.

Background to Sese Project

The Sese Coal project comprises one wholly owned prospecting licence and a number of prospecting licence applications located in northeast Botswana, approximately 50km southwest of the town of Francistown.

The project is situated close to the sealed highway between Francistown and Gaborone and is easily accessible.

Rail, road and power infrastructure is close to the project area.

African Energy discovered a large deposit of thermal coal at Sese in June 2010 and announced an initial resource estimate of 2.73 billion tonnes of coal within Prospecting Licence PL96/2005 (0.5 billion tonnes Indicated Resource and 2.23 billion tones Inferred Resource) in May 2011.

Concept Study Results were positive

Attractive project economics have been forecast and include: Stage 1 (Contractor) OPEX at US$13/ROM tonne and CAPEX at US$46 million; and Stage 2 (Contractor) OPEX at US$10/ROM tone and CAPEX at US$104 million.

The Sese deposit has a number of characteristics ideally suited to low cost open cut mining methods:

- Large continuous seam with a strike‐length of some 35km;
- Thick main seam which averages 14m thick;
- Full seam strip ratios of 1.6:1

Components of the BFS have already commenced, most notably an infill drilling programme to deliver a Measured Resource.

African Energy Resources extends potential investor reach to Botswana with BSE listing

Mon, 31 Oct 2011 01:25:00 -0400

African Energy Resources (ASX: AFR) joins a growing list of international resource companies as it prepares to list on the Botswana Stock Exchange (BSE) following approval for the dual-listing.

The company will join the likes of Discovery Metals (ASX: DML), A‐Cap Resources (ASX: ACB) and CIC Energy (TSX: ELC) when it begins trading on the BSE later today.

The move will place increased investor focus on its wholly owned Sese Coal Project, where the company continues to make rapid progress towards developing the 2.7 billion tonne project.

Importantly, Botswana is an emerging global coal province widely perceived as an excellent investment destination by mining companies.

The dual-listing provides African Energy with access to an additional shareholder base within Botswana that includes a number of significant institutional investors and pension funds.

A formal ceremony will be held in Gaborone today to mark the admission of the company to the BSE.

The Sese Coal Project

The Sese Coal Project is supported by good infrastructure 25 kilometres to the east, including road, rail and a 220 kilovolt power line.

India is considered the likely market for Sese thermal coal, with demand set to increase from 50 million tonnes per annum in 2010 to 210 million tonnes per annum by 2025.

China is also experiencing a surge in demand for the resource with thermal coal imports expected to double to 213 million tonnes by 2025.

In September, African Energy Resources received results from a Concept Study that confirm the technical and commercial viability of the project.

Robust cash flows and strong operating margins are possible under a variety of scenarios that do not require new rail and port infrastructure.

The study concluded that the project could be developed through a staged approach. An initial, up to 1 million tonnes per annum operation (Stage 1) can generate cash flows from 2013 and involves selling washed coal into domestic and regional markets.

Additional coal sales to a power station, and moderate volumes of export sales could expand Sese into a 3‐5 million tonnes per annum (Stage 2) operation.

African Energy Resources delivers “commercially viable" Concept Study at Sese Coal Project

Tue, 20 Sep 2011 20:45:00 -0400

African Energy Resources (ASX: AFR) has ticked an important box for the development of the 2.7 billion tonne Sese Coal Project in Botswana after receiving results from a Concept Study that confirm the technical and commercial viability of the project.

Robust cash flows and strong operating margins are possible under a variety of scenarios that do not require new rail and port infrastructure.

The Concept Study was completed under the supervision Philip Clark, the company’s Senior Coal Consultant, along with a number of other independent consultants including GEMECS, Coffey Mining, Minserve Pty Ltd and Wood Mackenzie.

Attractive project economics have been forecast and include: Stage 1 (Contractor) OPEX at US$13/ROM tonne and CAPEX at US$46 million; and Stage 2 (Contractor) OPEX at US$10/ROM tone and CAPEX at US$104 million.

The Study concluded that the project could be developed through a staged approach.

An initial, up to 1 million tonnes per annum (Mtpa) operation (Stage 1) can generate cash flows from 2013 and involves selling washed coal into domestic and regional markets.

Additional coal sales to a power station, and moderate volumes of export sales could expand Sese into a 3‐5Mtpa (Stage 2) operation.

Existing rail and port infrastructure are able to support Stage 1 and Stage 2 operations. Stage 1 and Stage 2 were considered to be best suited to a contractor serviced operation.

Expansion of the project beyond Stage 2 is possible through increased sales of coal to power stations, and/or through increased volumes of export sales (with India the likely market).

Increased volumes of export sales would require the construction of a heavy haulage railway and associated port infrastructure.

The ultimate Stage 4 project could exceed 30Mtpa production assuming new infrastructure is built. Stage 3 and Stage 4 will likely be an owner operated mine.

African Energy Resources believes that further evaluation of the project is warranted and has approved a bankable feasibility study to refine the technical and commercial evaluation of a mining operation to deliver up to 5Mtpa (Stage 2 operation).

Infrastructure

A detailed assessment of rail and port infrastructure was not undertaken as part of the Concept Study, although the company is maintaining dialogue with long term infrastructure consortia evaluating both east‐coast and west‐coast proposals.

Stage 1 and Stage 2 projects do not involve the export of large tonnages of coal and therefore require no additional rail or port infrastructure beyond that which exists within 30 kilometres of the deposit.

This allows Stage 1 and Stage 2 to be developed in a short time frame which is not captive to new infrastructure development. The volume of export coal that is commercially viable from the Stage 2 operation will be determined once export trials are concluded using material from the forthcoming bulk‐sample pit.

The timing of Stage 3 and Stage 4 operations will be determined by the timetable of proposed new heavy‐haulage railways or expansions of power station requirements.

Geology and Resource

The Sese coal deposit occurs in eastern Botswana and is hosted in the same Lower Karoo sediments as all other coal deposits in the region. The coal at Sese is characterised by a thick main coal seam which occurs close to the basal unconformity between the Karoo Supergroup and the Precambrian
basement.

The Sese Main Seam averages 14m in thickness, varying from 5m to 26m thick, and is close to surface. The Main Seam has been subdivided into the better quality Lower Main Seam (which accounts for over 60% of the total resource) and the thinner Upper Main Seam.

Along the northern margin of the tenement the coal is within 15m of the surface, deepening gently to no more than 80m at the southern boundary. Resource delineation drilling in 2010 provided information for an initial resource estimate in May which included 500 million tonnes of Indicated Resource and 2,223 million tonnes of Inferred Resource.

Mining Method

The Sese deposit has a number of characteristics ideally suited to low cost open cut mining methods:

- Large continuous seam with a strike‐length of some 35km;
- Thick main seam which averages 14m thick;
- Full seam strip ratios of 1.6:1
- Little apparent structural modification, and
- Very shallow dips in a very flat surface terrain.

Mine design has been based on conventional open‐cut strip mining where mining occurs along the strike of the deposit with successive strips being mined down‐dip. Mining commences with a box‐cut with waste initially hauled external to the pit.

Marketing – Coal Price forecasts

Wood Mackenzie has forecast a free‐on‐board (east‐coast port, southern Africa) price of approximately US$80/t for Sese export coal in 2013, increasing gradually to over US$100/t by 2025. This assumes that
Sese coal will compete with Indonesian sub‐bituminous coals and that Mozambique middlings will not exert downward pressure on prices.

Price projections for supply of domestic coals into southern African power stations range from US$1.20 to US$1.60 per MJ/kg. Based on this assumption, Sese power station coal has a range of expected mine‐gate
prices between US$25 and US$35/t depending on product specifications.

Operating Cost Estimates

Operating cost estimates have been prepared for each Stage and include provision for site preparation, drill and blast, waste mining, coal mining, general and administration and rehabilitation.

The estimates have been prepared to a nominal +/‐ 30% to +/‐35% basis (US dollars at 1 July 2011) with no provision for contingency or escalation.

These operating cost estimates have been benchmarked against the Wood Mackenzie Southern African Coal Supply Series Cost Analysis May 2011, and are consistently along the industry trend for ROM costs vs. ROM strip ratio, lending further credibility to the estimates.

Cost estimates have also been confirmed with initial discussions from southern African based mining contractors. The operating costs exclude the cost of rail and port costs which have yet to be established, but which are not relevant to Stage 1 and Stage 2.

Capital Cost Estimates

Capital costs estimates for each stage were generated to include all pre‐production mine development, major mobile mining plant (Stage 3 and Stage 4 owner operated mines only), coal handling and processing plant (minor costs only for Stage 1 and Stage 2 related to earthworks, raw water and rejects handling), support plant, non‐structural assets and pre‐production operational readiness, training and management costs.

The estimates have been prepared to a nominal +/‐ 30% to +/‐ 40% basis (US dollars at 1 July 2011), and include sustaining capital but no provisions for escalation or contingency.

Bankable Feasibility Study

Components of the BFS have already commenced, most notably an infill drilling programme to deliver a Measured Resource.

As part of the BFS, a Botswana consultant, Ecosurv has been appointed to undertake an Environmental Impact Assessment (EIA) on behalf of African Energy.

This commenced in July 2011 and has now reached the stage of community and stakeholder consultation, from which the terms of reference for the formal
documentation of the EIA will be derived. It is expected that the EIA will take 12‐15 months to complete.

African Energy Resources to boost thermal coal confidence categories at 2.7Bt Sese

Fri, 09 Sep 2011 00:41:00 -0400

African Energy Resources (ASX: AFR) has initiated an extensive exploration program at the Sese thermal coal project in Botswana, targeted at boosting the confidence categories of the existing JORC 2.73 billion tonne coal resource.

Currently the resource breaks down as 0.5 billion tonnes Indicated and 2.23 billion tonnes Inferred.

Highlighting how quickly Africa Energy is moving the project forward, currently five drill rigs are infill drilling at Sese.

The company is targeting a Measured Resource in the northern half of Block‐B and part of Block‐C, which are the two areas with the lowest stripping ratios.

The program will comprise 98 core holes on a 500 metres by 500 metre grid, with six large diameter core holes to collect samples for additional test work, along with a minimum of eight reverse circulation percussion holes to provide structural information in key areas.

The Measured resource is forecast to be delivered in the June quarter of 2012.

The Indicated Resource delineation drilling at Sese was completed last month, with Africa Energy expecting to announce an upgrade for the deposit to an Indicated Resource in the December quarter of 2011.

The Sese Project development plan

Africa Energy has already outlined the development of Sese, which has areas with very low strip-ratios of <2:1, which is amenable to open cut mining.

Importantly, the coal has the potential to produce large tonnages of power station feed, along with potential to wash to export quality.

The development plan includes a trial pit of a 10,000 tonne bulk sample for market tests.

More pending milestones

The news flow for Africa Energy comprises more than the pending confidence category upgrades.

The company is also set to commence a Definitive Feasibility Study in the September quarter of 2011, with a decision on an initial 1 million tonne per annum development by early 2013.

Africa Energy has then outlined the potential to ramp-up to 5 million tonnes annually over a short time frame, with a conceptual target of 20-30 million tonnes per year through to the export market.

African Energy Resources chairman tops-up shareholding

Tue, 09 Aug 2011 00:29:00 -0400

African Energy Resources (ASX: AFR) executive chairman Alasdair Cooke has acquired 300,000 shares at $0.34 in an on market trade.

Cooke purchased the shares for a consideration of $102,842 and now holds 11,081,339 ordinary shares in the company.

Earlier in the year African Energy reported and initial resource of 2.73 billion tonnes of thermal coal at its Sese coal project in eastern Botswana.

The coal occurs in one main seam which averages 14 metres in thickness over an area of 110 square kilometres, and most importantly is close to surface, which is expected to be amenable to low strip‐ratio open pit mining.

The main seam has been subdivided into an Upper and Lower seam on the basis of shale content.

African Energy Resources is currently trading at $0.33 per share.

African Energy Resources appoints general manager for southern African coal projects

Sun, 31 Jul 2011 22:30:00 -0400

African Energy Resources (ASX: AFR) has appointed the experienced David Scott as general manager of projects, with Scott responsible for managing the development of the company's coal projects in southern Africa.

Scott who is based in Botswana - has over two decades of experience with seven years at BHP Billiton (ASX: BHP).

Importantly Scott has experience in southern Africa, and most recently held senior project management roles in the expansion project at the Morupule Colliery in Botswana, currently the country’s only operating coal mine.

Scott will initially be responsible for delivering Feasibility Studies at the company's Sese coal project.

At Sese - earlier in the year African Energy reported and initial resource of 2.73 billion tonnes of thermal coal.

The coal occurs in one main seam which averages 14 metres in thickness over an area of 110 square kilometres, and most importantly is close to surface, which is expected to be amenable to low strip‐ratio open pit mining.

The main seam has been subdivided into an Upper and Lower seam on the basis of shale content.

African Energy Resources raises A$15m to fast track Sese Coal Project in Botswana

Sun, 17 Jul 2011 21:48:00 -0400

African Energy Resources (ASX: AFR) has raised up to A$15 million through an oversubscribed placement of 30 million shares at A$0.50 per share to advance the Sese Coal Project in Botswana, with a view to potential development in late 2012.

The placement to institutional and sophisticated investors from Asia, Europe and Australia is testament to the quality of the Sese project and has Helmsec Global Capital Limited acting as the lead manager.

The proceeds will be used at Sese for infill drilling to Measured status, trial pit and bulk samples, Feasibility Studies, an environmental impact assessment, working capital and transaction costs.

Frazer Tabeart, African Energy Resources' managing director, told Proactive Investors today that the funds enable the company to "substantially de-risk the project in the next 12 months through a trial pit which will provide bulk samples to allow potential customers (export and domestic/regional) to test the quality of the coal," as well as demonstrate the company's commitment to the project and its development.

The trial pit will also give African Energy the opportunity to assess export logistics in the region.

By continuing its resource drilling programs the company will progress through an Indicated resource on the whole deposit to a Measured resource for the area, which is likely to provide the first 25 years of production.

The company will commence the environmental impact assessment shortly, which is likely to be a critical step on the path to production.

The full Feasibility Study to assess all technical and commercial aspects of the project with a view to initial production in 2013, is subject to the usual government regulatory hurdles.

Helmsec has an exclusive mandate to provide financial and related marketing advice over a 12 month period.

In May African Energy announced a better-than-expected initial gross in-situ coal Resource at Sese of 2.73 billion tonnes, providing a boost to the company as it looks to upgrade the entire Resource to an Indicated category during the September quarter.

The company continues to unlock the potential for a much bigger coal resource in Botswana, with the discovery of a thick coal seam at Sese West on June 8, located just a few kilometres to the south of the Sese coal project.

African Energy Resources new coal seam discovery near 2.73Bt JORC Resource at Sese

Tue, 07 Jun 2011 20:55:00 -0400

African Energy Resources (ASX: AFR) continues to unlock the potential for a much bigger coal resource for the company in Botswana, with the discovery of a thick coal seam at Sese West.

Drilling at Sese West is part of a regional uranium exploration program, although coal seams were discovered ranging in thickness from seven metres to 30 metres, with the depth to the top of the coal varying from 79 metres to 157 metres.

The new discoveries are located just a few kilometres to the south of the Sese coal project, which hosts a JORC 2.73 billion tonne Resource.

However, Sese West is currently only valid for radioactive minerals, with African Energy having already applied for amendment to the licence to include the rights for coal.

The requested amendment is currently subject to the recently announced moratorium on coal and coal bed methane licence applications, which is due to end this September.

Highlighting how African Energy is looking to boost exploration in the area, the company has submitted six further prospecting licence applications for coal and coal bed methane in the last eight months.

The Sese coal project comprises one wholly owned prospecting licence valid for uranium, coal, coal bed methane, base and precious metals, and is strategically located near infrastructure with a sealed highway between Francistown and Gaborone and is easily accessible.

Rail, road and power infrastructure is also close to the project.