Name and Location
Minas Moatize coal expansion project, Tete, Mozambique.

Client
Beacon Hill Resources, through its subsidiary, Minas Moatize.

Project Description
Minas Moatize has a Joint Ore Reserves Committee-compliant resource of 86.8-million tonnes.

The project proposes to develop a large-scale openpit mine, which will extract and process about four-million tons a year of run-of-mine (RoM) coal at steady-state production and produce 2.8-million tonnes of saleable coal a year over 15 years, 30% of which will be coking coal.

Value
Total project capital was estimated at $166-million; however, Beacon Hill has identified a strategy to deliver an estimated $80-million reduction in the proposed capital expenditure (capex) associated with the expansion of Minas Moatize.

Duration
A revised expansion strategy will result in the company achieving plant capacity of 2.8-million tonnes a year by the end of 2013.

Latest Developments
Owing to low commodity prices and to reduce the effect of negative cash burn, Beacon Hill will reduce production at its Minas Moatize coking coal project until Phases 2B and 2C of the wash plant upgrade have been completed.

Phase 2A of the wash plant upgrade was completed in May this year. The ramp-up of this phase has performed in line with the company’s expectations, to date, and provides the necessary insights to remedy any inefficiencies in the Phase 2B implementation.

The reserve statement has also confirmed that Minas Moatize has a mine life of up to 15 years, which also supports the decision to currently educe production.

Phases 2B and 2C are scheduled for implementation during the first half of 2014 and will enable the mine to deliver 2.8-million tonnes of RoM coal, enabling it to reduce unit production costs to that of a tier 1 global hard coking coal producer. This will enable Beacon Hill to remain competitive and cash generative at current coal prices.

Phase 2B will increase the capacity of the plant from 1.8-million tonnes a year to 2.8-million tonnes a year through an additional crushing station and a second dense-medium cyclone plant. The old technology, Lamellas, will also be replaced with a thickener to increase the water recovery efficiency.

Phase 2C will comprise the installation of a flotation plant with a filter press that will increase the coking coal yield from about 15% to 21%.

Despite the company’s investment in its mainline power supply, one of the challenges in Tete, Mozambique, is a reliable power supply and the Phase 2B and 2C plan involves installing additional generator sets and voltage-drop protection systems. The construction period for upgrading the plant will be eight months from the date when the order is placed, the company says.

A preferred supplier has been selected to implement the upgrade on a turnkey basis, and a leading financial institution has been mandated to arrange a senior secured debt facility to complete its Phase 2B and 2C capital expenditure.

As mining and processing operations were still in the commissioning and ramp-up phases during the third quarter of this year, 79 202 t of RoM coal was mined at Minas Moatize during the third quarter, providing 19 859 t of saleable coal.

Key Contracts and Suppliers
Global Coke (offtake agreement); Tayanna Mozambique (excavation and coal extraction works) and Vitol Coal SA (marketing agreement).

On Budget and on Time?
Yes.

Contact Details for Project Information
Beacon Hill Resources executive chairperson Justin Lewis, tel +61 3 96279910 or email info@bhrplc.com.