26th Apr 2006 09:57
GVM Metals Ltd26 April 2006 26 April 2006 GVM Acquires Coal Deposit in Limpopo Province GVM Metals Limited (ticker: "GVM"), the South African mineral processing andcoal mining company, today announces that negotiations have now been completedto acquire a substantial open cut coal deposit in the Limpopo province of SouthAfrica. The consideration for the acquisition of a 74% interest in the permits will besatisfied by the issue of 20,812,500 GVM Metals Ltd shares. Subsequent to theissue of these shares, the total number of shares on issue in GVM will be52,123,387. The acquisition is subject to a number of conditions including theconsent of the Minister of Mines to the transfer and Shareholder approval. The Prospecting Right acquired consists of the adjacent farms Semple, OverVlatke, Bergen Op Zoom, and Voorspoed and cover an area of 8,662 Ha. Thenorthern boundaries of the farms are formed by the Limpopo River and are 50 Kmseast of Messina. The existence of coal on the farms has been known since the turn of thetwentieth century, although no real exploration occurred in the region untilSouthern Sphere Mining and Development ( a division of Utah Mining ) undertook adetailed exploration program in the late 1970's and early 1980's. The projectwas taken to a relatively high level of confidence with the drilling of coredand percussion boreholes with geophysical wireline logging, surface magnetic andgravity surveys and the mining of a bulk sample "shaft". Unfortunately in theintervening years much of the original bore hole data has been lost. It isbelieved that if all this data was available, the current resource would be muchcloser to being classified as measured. The project lost favour with thedis-investment of Utah Mining from South Africa and the sale of Southern Sphereassets in the middle 1980's, and low coal prices. A Competent Persons Report has been prepared and is based largely on theFeasibility Study on Overlakte completed in 1983 by Southern Sphere. It hasdefined an inferred resource of 352 million tonnes with a life of mine stripratio of less than 5:1 (5BCM waste to 1 tonne of coal). It should be noted thatthe coal seams extend into the adjoining farms and it is believed that theresource will be substantially increased in time. Detailed analysis of 50 boreholes and a 1535 tonne bulk sample suggest a softcoking product quality product with a yield of 23%, a calorific value of 30MJ/kg, ash of 12%, fixed carbon of 51-52%, total sulphur of 1.01-1.04 % and a freeswelling index of 3.0-7.0. The washing would also produce a middlings ("steaming") product with a calorific value of 23MJ/kg and Sulphur of 1%. The project lies some 40/50 kms north of Rio Tinto's billion plus tonne ChapudiCoal Project. Rio have announced that they are in discussions with Eskom theSouth African power parastatal to supply coal to a new Limpopo located powerstation . The ability to sell the middlings/steaming coal to a proximate powerstation will substantially improve the economics of the project. The project issome 40 kms west of the main Zimbabwe to South Africa railway line whichconnects to Richards Bay and the Mozambique port of Maputo. Simon Farrell, Managing Director of GVM Metals said: "This is a very exciting development for GVM. Domestic demand for both cokingand steaming coal has increased considerably and the export markets for cokingcoal remains strong. The Limpopo area is seen by many as the new coal provinceof South Africa and we intend to become a major part of that development. Workis progressing on our Holfontein coal project at Witbank and negotiationscontinue on expanding both our Limpopo and Witbank interests. The next stage ofwork at Limpopo is to conduct a drilling programme to further validate theoriginal Utah Mining studies and to bring the current resources into themeasured category." http://www.gvm.com.au/ GVM Metals Limited Simon Farrell T: + 61 8 9322 6776 Beaumont Cornish Limited, Roland Cornish Nominated Adviser T: +44 (0) 207 628 3396 Conduit PR Leesa Peters / Abigail Singleton T: +44(0) 20 7429 6600/ 6606 M: 0781 215 9885 / 07739 461 061 Emails: [email protected] / [email protected] NOTES TO EDITORS: GVM Metals Limited is registered in Australia (ACN 008 905 388) and has beenlisted on the Australian Stock Exchange ("ASX") since 1980, with the ticker"GVM". Copies of the Company's Annual Report can be found on the Company'swebsite : www.gvm.com.au SOUTH AFRICA: South Africa is the Company's principal area of expansion for mining andminerals processing assets as illustrated by the recent acquisitions of NiMagand the JV of the Holfontein project. Traditionally, South Africa has been amajor producer and exporter of coal. The vast bulk of this coal has beensourced from the Witbank coalfields which are now in their mature phase. Recentdevelopments in the demand for coal have concentrated expansion efforts towardsthe relatively underdeveloped northern coalfields, an area of great interest toGVM. Domestic demand for coking coal is also growing rapidly as a result ofexpanding steel production in the face of contracting local supply NIMAG : GVM has a 74% interest in NiMag which produces a range of metal alloys andfibres. The alloys are principally used in improving the technicalcharacteristics of cast iron and also in exotic metals used in the aeronauticalindustry. The Company can increase this interest to 100% HOLFONTEIN : As a result of increasing power demands in Southern Africa and the switch inSouth Africa from being a coking coal exporter to importer, it was felt by theCompany that it should examine local opportunities. In April 2005 GVM acquired a 49% interest in a small coal mining project called 'Holfontein'. TheHolfontein Coal project is a mineable coal deposit consisting of two mineablecoal seams, the No 5 seam, which is a coking coal, and the No 4 Seam, which is alow-grade steam coal. The recent scoping study confirms the value of theHolfontein property. FUTURE EXPANSION AND ACQUISITIONS: The Directors intend to grow the Company both organically and by acquisitionespecially in the coal mining sector. Largely through Chairman RichardLinnell's connections, several substantial coal properties have been identifiedand negotiations have commenced regarding GVM's participation. Richard Linnell,BSc. Hons (London), Chairman, is a geologist with over thirty years ofexperience. His early experience includes involvement in the establishment ofthe Delta Manganese Project (now Manganese Metal Company) and the Murray &Roberts Industrial Corporation. He was also marketing manager for the StainlessSteel division of Middelburg Steel & Alloys and general manager of theManganese Division of Samancor, a joint venture between Billiton Plc and theAnglo American Corporation. Richard was accountable for all of Billiton'sexploration and development activities in Africa and was an originator of theBakubung Initiative, a forum designed to revive the South African miningindustry which in turn led to the establishment of the New African Mining Fund. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MCM.L