Xceed Resources (ASX: XCD) has delivered a 43.8 million tonne initial Reserve for the 74% owned Moabsvelden thermal coal project in South Africa's key coal region of Witbank.
Following the establishment of Measured Resources, as well as the recent completion of a mining work program by mining consultants Belton Mining Group, Xceed has released Proved and Probable reserves of 30.7 million tonnes and 13.1 million tonnes respectively.
Managing director Ian Culbert told Proactive Investors Xceed is confident that it will be able to extend the mine life by potentially going underground.
"Our expectation at this stage is that a mine life in the order of 14 to 15 years currently exists, with excellent potential to increase this further," he said.
"With total Proven and Probable open cast reserves of 43.8 million tonnes, the Moabsvelden coal project is well positioned to become a substantial, long life mine."
Xceed continues to unlock the potential of Moabsvelden, and in October last year upgraded the Resource by 20% to 66.3 million tonnes and, importantly, 96% of this Resource is in the high confidence Measured category.
Extensive washability testwork has confirmed the resource contains a significant fraction of export grade thermal coal as well as domestic grade coal, with each accounting for about half of the total product.
The results of the washability testwork indicate that the combined average theoretical coal product yield to produce a primary product of 26 megajoules per kilogram (MJ/kg) and a 20MJ/kg secondary product is 63%.
The initial JORC coal Reserves for Moabsvelden have been prepared as part of a Definitive Feasibility Study currently being finalised, and also as part of Xceed's application to the Department of Mineral Resources for a mining licence for the project.
The Reserves of 43.8 million tonnes are inclusive of, and not additional to, the Resource of 66.3 million tonnes.
Next Steps at Moabsvelden
Xceed is planning to undertake further studies to investigate potential underground mining in areas on the project site where easement and environmental considerations constrain open cast mining.
The company is aiming to begin offsite fabrication this year ahead of commissioning the mine and first feedstock in 2013.
The maiden Reserves at Moabsvelden come hot on the heels of news Xceed has received South African Government approval for the acquisition of a 70% interest in each of the Roodepoort and Bankfontein thermal coal projects, located within a region that produces the majority of South Africa's coal.
Increasing the potential of the projects is that the Roodepoort project straddles Universal Coal's (ASX: UNV) 82.8 million tonne Roodekop project, while the Bankfontein project is located in the Ermelo coal field nearby Xstrata's Spitzkop and Tselentis collieries.
Importantly, as Xceed advances towards thermal coal production from Moabsvelden in late 2013, these two new project acquisitions provide the company with more than a single project, it provides Xceed with a pipeline of potential coal targets.
With the increase in exploration activity the market cannot expect more news over the coming months from Xceed.