Mozambi Coal (ASX: MOZ) has started exploration on its Songo license, in the highly prospective Zambeze Basin, northern Mozambique, with an initial drilling program to start in the next week.
The company has a significant exploration position within the country, with three projects covering more than 600 square kilometres and a combined Target Mineralisation of 4.96-6.19 billion tonnes of coking and thermal coal.
An airborne geophysical survey is being carried out over Songo, while plans are in place for a preliminary drilling program of 3000-5000 metres of diamond drilling.
The drill program will enable Mozambi to conduct technical due diligence on the Songo license. It is scheduled for completion during the December quarter of 2011 or the June quarter of 2012, depending on weather conditions.
Airborne geophysics will also be carried out over Mozambi’s Muturara and Tete West licenses during the December quarter of 2011.
The Songo agreement
Mozambi has the right to earn an 80% interest in Songo, which is held by local partner Xiluva Minerals Resources Lda. A $1.875 million private placement was announced with Polo Resources in July 2011 to finance the acquisition.
Zambeze Coal Basin – home of giants
Further boosting the prospectivity for Mozambi in the basin, Riversdale Mining (ASX: RIV) has already identified 13 billion tonnes of coal, (since acquired by Rio Tinto (ASX: RIO).
The Riversdale projects include Zambeze, where 9 billion tonnes of coal has been identified over 22 coal seams, with an agreement in place for Wuhan Iron & Steel to acquire 40% of project for US$800 million.
At Benga, 4 billion tonnes have been identified with a mining contract granted by Mozambique government for a 20 million tonnes a year operation.
Vale (NYSE: VALE), owns the Moatize Project, with a resource of 1.4 billion tonnes, and is set to commence production this year at a rate of 11 million tonnes per year of coking and thermal coal.
Mozambique is a stable multi-party democracy with a developing resource sector, and hosts one of Africa’s fastest growing economies with GDP growth rates between 4.5% and 7.6% over the last few years.
This has been aided by investments from China, India, and Brazil, directed into resources and infrastructure projects.
The country also contains massive coal resources in the Zambeze Basin, which currently stand at over 17 billion tonnes, and hold significant potential for further resource upgrades.
This coal has been identified as premium hard coking coal that is the same quality as contained in the Bowen Basin of Queensland.
If Riversdale is any guide, evolving into a multi-billion dollar valued company, Mozambi offers investors a potentially exciting future.