Energy development company Shumba Energy has signed an option to acquire 75% of the Morupule South project from Hodge Resources.

The Morupule project is located within the central eastern district of Botswana, directly to the south of the Morupule colliery. The project has a resource of 2.45 Bt JORC-compliant resources of which 380 Mt are in the measured and indicated categories.

Shumba Energy said further that the Morupule main seam represents 83% of the resources and that 1.2 Bt are amenable to open cut mining with initial waste to coal strip ratios of under 2 : 1.

The company said further in a statement that study results confirm robust economics across all Morupule South’s development scenarios. Global research and consultancy group Wood Mackenzie benchmarked Morupule South’s mining costs and coal quality against other southern African domestic mines and the project is expected to be one of the lowest cost in the region.

Shuma Energy MD Mashale Phumaphi commented that the Morupule South acquisition elevated Shumba Energy to take advantage of the domestic and regional industrial market. “The project has 1.2 Bt of high grade, open cast mineable coal, is located 5 km from an operating rail siding and can be brought into production within a very short timeframe. These factors put the Morupule South project ahead of other coal development projects in Botswana,” he said.

The terms of the acquisition are that Shumba Energy makes an immediate cash payment of $1.4 million to Hodges Resources and a further payment of $1 million that is due one year after commercial production.