Johannesburg, South Africa — MININGREVIEW.COM — 16 January 2012 – Sekoko Resources says it is negotiating a significantly improved off-take agreement with national power utility Eskom Holdings, after the parties called off a deal concluded at the beginning of 2011.
The company announced in February last year that it had signed a memorandum of understanding with the power utility to provide 525,000tpa of coal for six years to the Matimba power station.
The takeoff agreement was supposed to commence in April this year. At the time, Sekoko also clinched a R250 million financing deal with the Industrial Development Corporation for the development of its Waterberg coal project.
Chairperson Timothy Tebeila and CEO Jan Britz told Miningmx Sekoko had decided to change the project’s scale and mining plan. “That first deal was not sufficient to get the finance we needed,” said Tebeila.
Britz told Miningmx the company was now working on a reconfigured bank feasibility study, with first production planned for 2014, ramping up to annual sales of 10Mt by 2019. The project has a 5 billion tonne resource base.
Tebeila said Sekoko was still negotiating to bring a strategic partner on board, after earlier talks with both Jindal Steel and Coal India had failed. He didn’t want to divulge what percentage of production would be earmarked for off-take by Eskom, as the MoU was still being negotiated.
“It will be quite a significant improvement on the previous contract,” he said, adding that Sekoko expected to make an announcement on this and a strategic partnership within the next month or two.
“All the holes are lined up,” Britz said. “We’re not in limbo; we’re up and running. “It is a matter of weeks before we’ll have a lot to communicate.”
Sekoko’s joint venture partner for the Waterberg coal project is JSE and ASX-listed Firestone Energy. Firestone’s share price has languished in recent months and fell from a high of 37c in January 2011 to its current lows of around 9c.