FIRESTONE ENERGY/ SEKOKO PARTNERSHIP

Transcription

1 FIRESTONE ENERGY/ SEKOKO PARTNERSHIP the place, the project, the coal Garth Higgo, Chief Executive Officer Mining Indaba Cape Town firestoneenergy.com.au

2 DISCLAIMER This presentation may include forward-looking statements. These forward-looking statements are based on management s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Firestone Energy Limited, that could cause actual results to differ materially from such statements. Firestone Energy Limited gives no assurance that the events expressed or implied in the forward looking statements in this presentation will actually occur and makes no undertaking to subsequently update or revise the forward-looking statements made in this presentation to reflect events or circumstances after the date of this release. 2

3 AN EMERGING COAL PRODUCER An independent Australian coal group focusing on coal exploration and mining in South Africa Listed on the ASX and JSE Significant farm-in JV with recognised South African BEE partner, Sekoko Resources, to develop and mine coal in the Waterberg Coal Region of South Africa The objective of the JV is to complete a BFS to mine and beneficiate coal in the Waterberg Region for domestic and export consumption Further substantial growth prospects as an Independent Power Producer (IPP) in Southern Africa Significant growth prospects as the demand for coal grows domestically and internationally 3

4 CORPORATE SUMMARY Capital Structure Shares on Issue Trading 1,225.3 Restricted n/a TOTAL 1,225.3 Options Fully Diluted 1,457.8 Top Shareholders Sekoko Resources Colbern Fiduciary Nominees Pty Ltd Vernon Finance Limited Millcorp Securities Pty Ltd Market Cap (Diluted $0.020) $29.15M Board Lee Boyd - Non-Exec Director Malcolm Smartt - Non-Exec Director Daryl Henthorn - Non-Exec Director Tim Tebeila - Non-Exec Director Amanda Matthee - Non-Exec Director CEO Garth Higgo Company Secretary Lee Boyd ASX : JSE : FSE FSE 4

5 VISION AND STRATEGY Vision: To become a leading producer of coal and energy in Africa Strategy : Rapid exploration programme to expand the Waterberg resource base Indentify further joint venture opportunities Develop a world-scale mining operation with internationally significant exports To develop an environmentally conscious Independent Power Producer strategy 5

6 PROJECT LOCATION THE WATERBERG COAL FIELD Strategic coal field with thick near surface coal seams Identified as next growth area to supply South Africa s electricity utility Eskom Located 400 kms north of Johannesburg Mining by Kumba Resources (now Exxaro) commenced in 1980, the only operating coal mine in the Waterberg coal field Average coal seem width between 90m -110m, characterised by 11 discrete zones, of with upper zones (6 11) holding highest commercial value (semi-soft coking coals) Estimate to contain 50% of South Africa s remaining coal resources (up to 400 years of coal) Eskom building a new 4,500MW coal fired facility, Madupi Power Station, fully operational by

7 THE WATERBERG JOINT VENTURE WITH SEKOKO COAL Sekoko Coal has contributed the Waterberg prospecting rights over two farms (Olieboomsfontein and Vetleegte of approx 2,100ha) to form the Waterberg JV Vetleegte has an estimated inferred resource of 508Mt of coal Firestone participation commencing at 30%, and increasing by 5% for every R10m spent on the BFS (up to a maximum of 55% following expenditures of R50m) Firestone is commencing with a BFS to determine commercial exploitation of the assets The JV will result in the establishment of a leading growth focussed African coal explorer and producer using Firestone s expertise in putting exploration projects into production 7

8 THE WATERBERG JOINT VENTURE LOCATION OF PROPERTIES 8

9 SEKOKO RESOURCES Interests in Coal, Iron Ore and Platinum A recognised broad based South African BEE company with interests in coal, iron ore and platinum Extensive coal rights in the Waterberg and Soutpansberg coal regions through its wholly owned subsidiary, Sekoko Coal Holds prospecting rights on eight (8) farms in the Waterberg Region (approx 7,800ha) adjacent to Exxaro s Grootegeluk Mine In addition to primary minerals exploration and development projects; Sekoko is also involved in beneficiation downstream project studies for coal liquefaction, coal-fired power generation (IPP) and direct iron smelting technology prospects Involvement of Sekoko Coal in the Waterberg Coal Region is of strategic importance given future fuel and energy requirements in South Africa 9

10 Coal, Iron Ore and Platinum Project Locality 10

11 DRILLING PROGRAMME VETLEEGTE 27 diamond holes completed Significant coal intersections Awaiting coal quality assay results Revised resource estimation expected when results received OLIEBOOMSFONTEIN RC drill program planned for January 2009 to identify structural domains Follow-up diamond drilling in areas of near surface coal zones 6-11 Resource estimation from RC and diamond drilling results 11

12 COAL MARKET FORECAST REMAINS ROBUST Fossil fuels to provide 79 percent of total world energy use by 2030 Coal has been the fastest-growing major fuel for five consecutive years Global coal consumption rose by 4.5% pa in 2007 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17,

13 COAL MARKET World coal demand forecast to almost double from 2005 to 2030 International coal trade expected to increase from 764Mt in 2004 to 1,122Mt in 2030 (+46%) World Consumption by Country Grouping Most widely used primary fuel, accounting for about 24% of the total fuel consumption in the world s electricity production The seaborne trade in steam coal has increased on average by about 7% each year Approximately 28% of South Africa s production is exported, largely through the Richards Bay Coal Terminal (RBT) making South Africa the fourth-largest coal exporting country in the world (66Mt in 2006) Source - Energy Information Administration (EIA) Official Energy Statistics US Government 13

14 THE SA DOMESTIC COAL MARKET Demand for primary energy in South Africa has risen significantly and Eskom s coal consumption rose to 125Mt in 2008 from 119Mt (+5%) Eskom, South Africa s power utility, generates 90% of its power from domestic coal Eskom s long term suppliers have been unable to keep pace with demand and new short-term contracts have increased to 21% (from 2%pa) Up to 2 million tonnes of export quality coal has been diverted to the domestic market as demand outstrips supply South Africa plans to double its 40,000MW energy capacity by 2025 It is estimated that the Waterberg coal field could support up to 8 new power stations Approximately 93% of South Africa's primary energy needs were provided by coal in

15 SUBSTANTIAL GROWTH PROSPECTS AS INDEPENDENT POWER PRODUCER Sekoko short-listed as one of 27 companies prequalified by Eskom to provide a base load Independent Power Producers (IPP) solution Future power generation capacity to be divided between Eskom (70%), and IPP s (30%) Eskom to be the sole buyer of electricity generated by IPP s Build-own-operate basis, with envisaged contract term of 40 years Eskom's immediate requirement ranges from megawatts to approximately megawatts Matimba Power Station Waterberg Source - Kumba 15

16 PROJECT DEVELOPMENT PLANS Done Historic data compilation and review Vetleegte resource drilling Doing Olieboomsfontein exploration RC / diamond drilling Compiling results for Vetleegte drilling and resource estimation To Do Resource drilling at Olieboomsfontein, Finalise resource estimation at Vetleegte and Olieboomsfontein Feasibility study for Vetleegte and Olieboomsfontein 16

17 RAPID TRAJECTORY TO PRODUCTION Completion of the Waterberg JV with Sekoko Coal Listing of Firestone on JSE Commence exploration on Olieboomfontein Resource estimations for Vetleegte and Olieboomsfontein Commence feasibility study work Continue feasibility study work Commence preparations for mining Start small scale open pit mining 17

18 INVESTMENT OPPORTUNITY IN FIRESTONE ENERGY Development of leading African Coal Company in a well established low risk environment The JV carries full BEE compliance Low exploration and geological risk (resources are adjacent to Grootegeluk mine) Significant upside as company moves towards production goals Full ASX and JSE exposure Robust coal market fundamentals expected to continue Company plans to grow into the market demand for coal Recruiting a strong exploration and mining team 18

19 FIRESTONE ENERGY LIMITED the place, the project, the coal Garth Higgo, Chief Executive Officer Mining Indaba Cape Town firestoneenergy.com.au