Beacon to fire up after wash down

BEACON Hill Resources says it expects to move into full production at its Minas Moatize project in Mozambique in the coming weeks.
Beacon to fire up after wash down Beacon to fire up after wash down Beacon to fire up after wash down Beacon to fire up after wash down Beacon to fire up after wash down

Courtesy, Beacon Hill

Staff Reporter

The AIM and Australian Securities Exchange-listed company commenced mining and processing operations in May following the completion of the first phase of the operation’s wash plant upgrade to a capacity of 1.8 million tons per annum run of mine coal.

Beacon Hill chief executive officer Rowan Karstel said the company would complete the commissioning of the phase 2A wash plant in coming weeks.

"We continue to advance our Minas Moatize coal project in Mozambique as evidenced by first production of coking and thermal coal following the completion of the first phase of our wash plant upgrade,” Karstel said.

“While the spot price of coking coal is lower than in previous years, low cost producers such as Beacon Hill remain well-positioned to build value, particularly when considering the high quality specifications of our product and the ongoing progress made in executing our cost-efficient logistics solution.

“This differentiates us from many of our peers and with the associated rail infrastructure developing well, we look forward to completing the commissioning of the wash plant and moving into full production over the coming weeks."

It has been a non-stop June quarter for the company, with a number of hurdles slowing progress on the wash plant upgrade, rail infrastructure development underway and initial production kicking off.

A total 153,520t ROM coal was mined, with 14,354t of saleable coal produced.

Production at the mine was only active during the final six weeks of the second quarter and is expected to increase as commissioning progresses.

Due to the reduction in hard coking coal prices during the June quarter, inventory was being carefully phased to produce volumes that would coincide with rolling stock availability in the third quarter of the year, Beacon Hill reported.

The company has prioritized the development of the associated rail infrastructure, most notably the Carbonac transfer station in the town of Moatize in the Tete province and the Beira transfer station.

“The development of the Carbonac transfer station is advancing encouragingly and the company is currently on schedule to have the work completed by the end of August 2013,” the company stated.

“The transfer station in Beira is currently behind schedule and the company remains in dialogue with [rail access provider] CFM as to interim measures that can be taken until the final siding location is approved and construction work completed.”

Beacon Hill expects delivery of the first rolling stock in Q3 2013 and to begin transporting coal via the Sena rail line in Q4 2013.

Beacon Hill said it was focusing on pursuing phases 2B and 2C implementation for the first half of 2014, subject to bank or vendor funding to deliver the required volume of 2.8Mt ROM coal that would reduce unit production costs to that of a tier 1 global hard coking coal producer.

The junior miner said discussions were progressing with financial institutions with the view of arranging a pre-export senior secured debt facility or a mezzanine debt facility to start its phase 2B/2C capital expenditure.

The company also entered into negotiations with several equipment providers to submit finance proposals on a build-own-transfer basis to fund the imminent wash plant upgrades.

“If the BOT vendor financing is completed satisfactorily, this would be expected to replace the senior debt facility requirement,” Beacon Hill said.

The company said a decision was expected shortly and an updated JORC reserve statement was also due to be announced as soon as the consultants issued final approval.

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