The cash flow will partially fund further exploration, operational and project development costs, and assist with the staged development of the infrastructure, plant and equipment to support an expanded coal mining operation at Ngaka.

This is in addition to the bulk sample of 300 tonnes which is being implemented as soon as the wet season ends, Atomic managing director Clinton Cain said.

“Under the original model we wouldn’t commence generating cash flow for at least another two to three years,” he said.

“However, under our proposed small-scale mining strategy, the company anticipates developing a recurrent income stream from the sale of coal to domestic customers in Tanzania, and increasing production and cash flow as the project develops. The company has recently held discussions with, and received letters of intent from, potential customers in Tanzania.”

Atomic started work on the Ngaka feasibility study in May 2009. Six months later it acquired the Mbalawala (south) and Myburua-Mkapa (north) concessions, which tripled the size of its ground in the Ngaka Basin.

“I strongly believe that the size and the scale of the Ngaka coal project has been significantly undervalued,” Cain said.

“Ngaka looks like three coalfields in one. When the latest drill results are available, our potential tonnage is expected to double to over 400 million tonnes and this doesn’t include the new concession areas. The exploration program has been expanded to include the additional areas and this will impact on the timing of the completion of the feasibility studies.”

The Ngaka coal project is being developed through Tancoal Energy, a joint venture between Atomic’s 85%-owned Tanzanian subsidiary, Pacific Corporation East Africa, which owns a 70% interest in Tancoal, and the National Development Corporation of Tanzania, which owns 30%.