ZYL's SA tenements remain in high demand

AUSTRALIAN Securities Exchange-listed ZYL has obtained expressions of interest from major international commodity traders for its Kangwane and Mbila coal projects in South Africa, representing the chance to produce 4 million tonnes per annum of anthracite coal.
ZYL's SA tenements remain in high demand ZYL's SA tenements remain in high demand ZYL's SA tenements remain in high demand ZYL's SA tenements remain in high demand ZYL's SA tenements remain in high demand

ZYL Limited's projects in South Africa.

Lauren Barrett

The company said it had commenced discussions with parties involving EOIs for production funding for the two tenements in exchange for securing offtake rights.

While the explorer did not name the companies involved in the EOIs, it said the global commodity traders already had agreements to procure export capacity for coal and/or anthracite at the Matola coal terminal in Mozambique and might have similar opportunities through other South African ports.

The Kangwane EOIs received to date totalled 1.7Mtpa, up from the initial 1.2Mtpa of output planned for Kangwane.

The Mbila EOIs received to date totalled 2.3Mtpa, exceeding full planned saleable production for both phase 1 and 2 of production.

ZYL executive chairman Bevan Tarratt said the new EOIs represented a sevenfold increase in the company’s production.

“In consideration for rights to secure offtake from the projects for an agreed period, the additional EOIs submitted include the intent to negotiate a potential combination of advance funding to assist the commencement of production at the projects and/or an equity investment in ZYL,” he said.

Tarratt said the level of interest in both projects had far surpassed his expectations.

ZYL is working with the interested parties and its corporate advisors to formalise the EOIs.

Last month, ZYL announced it had received six expressions of interest for offtake from its Mbila coal project in South Africa, representing the chance to produce more than 600,000 tonnes per annum of coal.

Back in December, ZYL confirmed it had received two expressions of interest from potential buyers seeking to either partner with or acquire the company outright.

The Mbila project, located in the KwaZulu-Natal province of South Africa, has a JORC-compliant resource of 125Mt.

The tenement is located about 105km northwest of the Richards Bay coal terminal.

ZYL’s Kangwane tenement is situated in South Africa’s Mpumalanga province and has an exploration target of 350-450Mt and a JORC-compliant resource of 136.3Mt.

The Kangwane project is focused on the export market while the Mbila project is initially targeting domestic supply.

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