Company announcements

Quarterly Activities Report for the period to 31 March 2012

30 April 2012

The Board of Firestone Energy Limited (ASX/JSE: FSE) (“Firestone” or the “Company”) is pleased to provide shareholders with its Quarterly Activities Report for the 3 month period ended 31 March 2012.

Highlights

  • Sekoko Coal signs an MoU for a coal supply agreement with Eskom Holdings Limited;
  • AUD $2.2M Finance Facility negotiated; and
  • Technical and environmental work on track.

Overview

Firestone’s South African Black-owned partner, Sekoko Coal (Pty) Ltd, has signed a Memorandum of Understanding for a Coal Supply Agreement with Africa’s largest power utility, Eskom Holdings Limited, to supply thermal coal from its Waterberg Coal Project in the Lephalale area, Limpopo, to Eskom power stations in the Mpumalanga Province.

Both parties have agreed that, upon compliance of the terms and conditions set out in the MoU, the parties will enter into a Coal Supply Agreement containing enabling provisions for the Firestone / Sekoko Joint Venture to supply a minimum of 10Mt of thermal coal on a Free on Rail (FOR) basis annually to Eskom’s two designated power stations in the Mpumalanga area for a minimum period of thirty (30) years. The production of coal will commence in 2014 and will ramp up over a period of five (5) years to 10mt/pa.

On the 7 March 2012, the Company received an offer from the Tata Power Company Limited to invest in the Firestone and Sekoko joint venture, valuing 100% of the JV’s Waterberg Coal Project at approximately AUD $130 million. Following consideration of the offer, the Board of Firestone decided to reject the offer on the basis that it materially undervalues the inherent value that has been built up in the project to date.

Finance Facility

In March the Company secured a AUD$2.2M short term finance facility to provide working capital to the Company for general corporate purposes.

In addition, the Company is considering further funding initiatives to finance it’s share of the Joint-Venture expenses in relation to completing a Definitive Feasibility Study as required in the terms and conditions of the Eskom MoU.

Corporate

In January 2012, Mr Colin McIntyre, resigned from Firestone as independent Non-Executive Director. To date the Company has not replaced this position.

Outlook

The management of the joint venture continue to work closely and are focused on unlocking the value in the Waterberg Joint Venture Project. The Company is increasingly being recognised in the marketplace and within the industry on its activities and achievements.

Quarterly financial report for the period to 31 March 2012 (PDF - 198KB)

For further information

David Knox
CEO
www.firestoneenergy.com.au

About Sekoko Resources

Sekoko Resources (Pty) Ltd is a South African-based black-owned energy and minerals company developing the coal, magnetite iron ore and PGMs Projects in the Limpopo Province of South Africa. This includes a significant exploration program and development of the Waterberg Coal Joint Venture Project based on significant Coal Zone Resources.

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