News blog
Beacon Hill Resources
- BY: Andrew Hore |
- POSTED: 09/05/2010 |
Beacon Hill Resources has moved into the coal mining sector through the purchase of the Mozambique-based Minas Moatize by a 49%-owned associate.
Minas Moatize is costing $35m and BHR has an option to increase its stake in the holding company to 75%.
This is the only operating coal mine in the Tete province of Mozambique - it is one of three sites in the area to have a mining licence. There is a mixture of coking and thermal coal at the mine. The estimated current resource is 33m tonnes of mineable coal with scope to increase this through a drilling programme that is just starting.
BHR intends to expand current production to 5,000 tonnes of coal a month. BHR will invest $7m this year. Next year, BHR will invest $23m in starting open cast production and building a processing plant. The first export grade production should be at the beginning of 2012.
The transport infrastructure is good with rail lines that can take the coal to ports.
BHR plans to build up production to 2m tonnes a year in 2013. Revenues from the mine could amount to nearly $200m, even if coal prices are lower than they are now - at current prices the figure is nearer $250m. The profit after tax could be $66m.
There have been complications in developing the company’s magnesite project in Tasmania but it should be in production in around 18 months.
BHR has cash of around £1m. BHR will need to invest in Minas Moatize but it hopes to do this at a project level.
At 4.75p a share, BHR is valued at £12.3m. A 25-for-one share consolidation was implemented on 8 April.
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