The farm swap agreement was made by Coal of Africa with Kwezi Mining and Exploration and Chapudi Coal, both of which are held in a joint venture by Rio and the Kwezi Group of South Africa.
Under the deal, Chapudi and Kwezi will grant access and cede to Coal of Africa “certain prospecting rights and interests over certain project areas that are contiguous” to its Makhado project.
Coal of Africa will cede to Chapudi “prospecting rights and interests over certain other farms, also located in Limpopo Province”
The result for Coal of Africa is another three coking coal projects, and another two farms to expand its existing Makhado coking coal project area.
The company’s new Mount Stuart project is to the northeast of Makhado, while the Jutland and Voorburg projects have been created to the northwest.
The Mount Stuart open cut project is expected to have a similar size and quality resource to Makhado and will be the focus of an extensive drilling program, with the last drilling taking place in the early 1980s.
The Voorburg project was also subject to drilling back in the early 1980s, but the company has drilled 10 boreholes to validate this exploration.
A resource estimate is expected in “due course” and Coal of Africa is excited about the “coking propensity” of the coal.
About 80 boreholes were drilled in the Jutland project in the early 80s and more historical information is being sourced.
“This farm swap agreement between Rio Tinto and Coal of Africa gives both companies the potential to develop significantly larger scale contiguous and economic coal projects,” Coal of Africa chief executive John Wallington said.
The completion of the farm swap allows the company to lodge a New Order Mining Right for its Makhado project.
Makhado is expected to produce 5 million tonnes of hard coking coal product once up and running.
Shares in Coal of Africa closed up 7.8% to $1.455 yesterday afternoon.