The non-binding agreement allows for the Southern African Power Pool utility to make a full assessment of Sese before deciding whether to enter into a binding agreement to joint develop and finance the project.

Coal for the Sese power plant will come from its adjacent Sese coal mine which has a total indicated and inferred resource of 2.6 billion tonnes of coal.

A bankable feasibility study is underway for both the Sese power station and mine which is projected to produce 1-2 million tonnes per annum of coal from mid-2013.

The company is planning for production in stage 2 to ramp up to 4-5Mtpa in 2015 and stages 3 and 4 to reach 20-30Mtpa via expanded exports.

Negotiations with Botswana’s Ministry of Transport and Communications and Botswana Railways are anticipated to establish an economic rail tariff for the transport of coal to Maputo.

African Energy said Sese had the potential to be exposed to massive seaborne coal export markets in the long term if new infrastructure was developed.