Black-empowered junior miner Petmin is a South African-based, JSE-listed minerals, mining and processing company, which services the metallurgical and industrial sectors.
The company has two cash-producing mining assets – SamQuarz, a silica producer, at Delmas, in Mpumalanga, and Springlake Colliery, an anthracite producer, near Dundee, in Kwazulu-Natal. The company also has the Somkhele anthracite project, currently under development, near Richards Bay, in Kwazulu Natal.
Richards Bay Coal Terminal allocation Petmin’s current allocation at the Richards Bay Coal Terminal is 235 000 t/y over the next three years but this is reassessed on the basis of usage every 12 months. The company is confident that, as a result of its empowered status and Springlake’s ability to meet and increase its export tonnages, the renewal (and indeed, an increase in allocation) will be achieved.
Silica mine SamQuarz, acquired in September 2004 for R72-million, is the largest producer of high-quality silica in South Africa, producing about 35% of the country’s total annual consumption and ser-vicing primarily the metallurgical and glass-manu- facturing sectors.
It is an opencast mine, mined by a contractor, and has a state-of-the-art, German-designed and constructed processing plant commissioned in 2001 at a cost of R105-million. The mine has been in operation since 1955 and has 40 years of mineable proven reserves at a run-of-mine production rate of 1,2 million t/y. In response to a slowdown in the ferrochrome market (a significant market for SamQuarz’s metallurgical product), reported in Petmin’s results for the six months ended December 31, 2005, SamQuarz is both expanding its customer base and has right-sized production to match market conditions.
Further, the cost base is being brought in line with the sales profile. Collectively, these measures are expected to minimise the impact on revenue stream and to improve margins and profitability in the longer term. Anthracite operation Springlake Colliery formed part of Petmin’s acquisition of Springlake Holdings together with the Somkhele Project in November 2005 for R108-million. It is situated within the Klipriver coalfield, near Dundee, in Kwazulu-Natal. Springlake has a 29-year operating history and produces up to 1,1-million run-of-mine t/y of anthracite for both domestic and international markets.
Some 600 000 t/y are produced from underground and 500 000 t by opencast mining. Mining of the opencast operation was recently taken over by a new contractor. A competent person’s report in 2005 indicated a life-of-mine of at least ten years for the underground operation and eight years for the opencast operation.
Production challenges relating to availability of equipment, adverse weather conditions and skills shortages have been addressed. Continuing rand strength is expected to continue to impact on revenue from exports.
Consequently, Springlake has a focus currently on optimising domestic sales and structuring its export sales so as to minimise exposure to currency risks.
Petmin COO Bradley Doig says the South African market for anthracite is approximately 1,5-million t/y (excluding an estimated one-mil- lion tons required by low-smoke/smokeless fuels users). There continues to be a shortage of high-quality anthracite in the South African metallurgical sector, and in the ferrochrome and titanium markets particularly. This provides significant marketing opportunities for Springlake.
Somkhele Project The Somkhele anthracite project is based on a high-quality anthracite deposit, near Richards Bay, Kwazulu Natal. A recently-completed drilling programme has yielded expected additional proven reserves in Area 1 of 9,30-million tons which, together with those previously reported for Area 2 of 2,35-million tons, gives a total of 11,68-million tons, sufficient for more than 12 years of production at a full production capacity of 950 000 t/y. In February this year, Petmin announced that it had authorised the development of an openpit mining operation and that a contract to build a R56,7-million coal-beneficiation plant had been signed in December 2005.
Earthworks relating to the plant platform, access roads, tailings dam and stormwater handling are nearing completion and are on budget. Detailed design on the plant is complete and procurement is under way. The project is fully funded, following a successful capital raising of R75-million and the securing of a loan facility with a major financial institution for a further R40-million.
© 2009 Petmin Limited