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Sable Mining Africa publishes bankable feasibility study for Rietkuil coal project

World Coal,

Sable Mining Africa Ltd has published a bankable feasibility study (BFS) on Delta Mining Consolidated Ltd’s (DMC) Rietkuil coal project in South Africa.

Andrew Groves, Sable Mining CEO, said: “The completion of the BFS on the Rietkuil project is a showcase of the company’s ability to deliver a quality project that is now one of a few coal projects in South Africa that is about to be transformed into an operating entity. Having been granted a mining licence at Rietkuil in December 2010, we are now in a position to rapidly move forward with development of the mine.”

The Rietkuil project holds up to 156.9 million t of coal. It is 80 km east of Johannesburg in Mpumalanga province.

The BFS, which was completed by SRK Consulting, UK, refines the information of the 2009 Feasibility Report to an accuracy of ±10% and highlights the salient facts with the objective of establishing the optimal path to production at Rietkuil. The study establishes the requirements, design criteria and preliminary design for an efficient beneficiation plant delivering 2.6 million tpa of coal product for local, export and thermal markets over a minimum 30 year LOM. The BFS also supports an internal rate of return of 17.2%, a  payback period of five years from the commencement of construction and estimated initial capital expenditure of Rand 906 million.

Rietkuil has the benefit of being in close proximity to established infrastructure including rail and roads linking the mine to Richard’s Bay coal terminal and domestic clients. The project has been allocated a rail siding number, further improving access to export markets. Importantly, Rietkuil is also located approximately 30 km from the nearest Eskom power station, and a tender has been submitted to become one of Eskom’s preferred suppliers.  Eskom is South Africa’s largest consumer of domestic coal, and it is DMC’s intention to target Eskom as a major off-take customer for its power station grade product.

Sable Mining is currently in an advanced stage of negotiations with Quattro and Transnet to secure rail and harbour allocation. The company remains optimistic that these negotiations will be concluded in due course. The BFS is predicated on selling 50% of the saleable product to domestic markets. However, the company is negotiating to obtain sufficient rail and harbour allocation for up to 90% of product. As export prices are significantly higher than domestic prices, the increase in rail and harbour allocation, if achieved, should result in a substantial increase to the net present value of the project.

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