News blog
Strategic Natural Resources
- BY: Andrew Hore |
- POSTED: 28/10/2008 |
Strategic Natural Resources has reached a formal coal supply agreement with an indirect subsidiary of AIM-quoted power generation projects developer IPSA.
Indwe Power will buy 1m tonnes of coal a year from SNR. The deal covers 25 years including the period up until the power plant starts to generte electricity. The agreement is for 20m tonnes of coal so it will probably take less than 25 years to deliver that amount of coal. When that happens the contract will be up for renegotiation. The effective amount supplied will relate to the calorific value of the coal.
The coal will be used in a 250MW power plant that will be built near the mine.
The price paid will be similar to the price Eskom is currently paying for coal on the Eskom Spot Market.
IPSA is planning more power stations in the East London area of the Eastern Cape and this will provide further markets for SNR’s coal. SNR has 52m tonnes of extractable coal and further exploration could significantly increase that figure.
At 22p a share, SNR is valued at £14.3m.
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