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Minergy Ltd (BSE:MIN) owns the Masama coal project in Botswana

“We have come such a long way and are pleased with developments at the mine site,” said Morné du Plessis, Minergy’s chief executive.

“We are extremely excited about the future of the project, our ability to supply coal into the region, the highly experienced team responsible for executing the plan, as well as our capacity to contribute towards a viable coal sector in Botswana.”

Mine infrastructure, including extensive civil work, power reticulation, water reticulation systems, access roads, weighbridges offices and workshops was completed in 2019, and the mine box cut was ahead of schedule.

“During early July 2019, the plant had successfully passed both electricity connectivity and leak tests and we are pleased to report that it is now fully operational, producing saleable coal,” du Plessis added.

Plant upgrades have since improved efficiencies and provided consistency in both product quality and sizing.

It is envisaged that Minergy will be mining 110,000 tons run of mine per month. The same quantities will be put through the washing plant and this should result in saleable coal of between 70,000 and 80,000, increasing to 100,000 tons per month next year.

High demand anticipated

Demand for the product is high as a result of the short supply of coal specifically into the South African industrial market. It is believed that South African electricity generator Eskom will suffer a shortfall in coal supply of 470 million tons by 2030. Large players in the sector, Anglo American and South 32, are respectively withdrawing from the coal sector and disposing of their coal assets, meaning the supply will tighten even more.

Minergy is currently exploring various options for offtake, ranging from longer-term agreements for the finer duff product to spot deals for the bigger fractions.

In 2019 the company raised P90mln from the Botswana Development Corporation as well as from the Minerals Development Corporation of Botswana. The funding is sufficient to bring the mine into production.