African Energy Resources (AFR) have entered into a binding shareholders agreement with First Quantum Minerals (FQM) following completion of a due diligence on AFR’s Sese joint venture project.

For US$ 8 million, FQM will receive an initial 51% in African Energy Holdings SRL who in turn will repay any outstanding loans to African Energy Resources.

In June 2010 African Energy Resource discovered the Sese coal deposit in eastern Botswana, and recognised the potential to develop multiple projects from a single, massive resource. Total resources now stand at 2.65 billion tonnes, of which over 625Mt are in the Measured Resource category, sufficient for projects spanning several decades

The Sese Coal & Power Project provides the potential for low-strip ratio open pit mining of the entire resource due to its large strike-extent, thick coal seam and proximity to surface. This allows the flexibility to mine several sections of the deposit at the same time and hence the ability to vary annual mining rates with ease.

Further investment agreed

Within 18 months of the agreement, FQM will invest a further US$ 12 million to be used to investigate the development of power projects at Sese. The proposal is for one or more 300MW power station providing adequate electricity for the rich coal mining area.

AFR’s 25% interest in the Sese Joint Venture will be carried through to the commercial operation of each power station funded by FQM.