Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
The comments in the latest BPC RNS represent a damning picture of the competence of Leo and his merry men. Time will tell if their proven operating experience and skills lift profitable production and thus cash flow in Trinidad sufficient to pay for the enlarged BPC overheads. Success would almost certainly end of LK's seat on the BPC board.
After overseeing a precipitous decline in the CERP share price, Leo Koot has now been appointed as a BPC non-executive director and a sitting member of the Board's HSE Committee and Audit Committee to,
a) question to challenge, question and monitor the CEO and senior management
b) bring an independent perspective to decision-making
c) hold senior management to account and support and mentor the CEO and senior management.
d) act in the interests of the company’s stakeholders.
One presumes that as Geoffrey Leid (ex Managing Director, Trinidad of Columbus) has joined the BPC executive leadership team, he will lead operations in Trinidad. These operations driven by Leo Koot have been less than successful for a number of years which makes one wonder how the said Mr Koot can challenge, question and monitor the CEO and senior management of Bahamas Petroleum in his non executive role. Or is it just a sinecure.
It's great to see the mining operation re-commence at Rukwa but hard to believe that the former EDL staff and subcontractors were so poor and inefficient that a new operator can raise the output from historically low levels to 10,000mt of washed coal per month unless there are major amendments to the set up. The haulage can be dealt with by increasing the number of trucks but the critical path is probably through the screening plant which processes the whole of the ROM en route to the crusher; dealing with this and sorting out the night shift are crucial to the potential output.
In his recent video, Leo Koot brazenly explains the merger with Bahamas Petroleum rationale saying "I do believe it's a clever, intelligent deal" and continues "We looked at many options and opportunities, thought this through very carefully, and we think this is the best one, and that's why we did it." He then explains "that the board opted for a paper deal in order to allow shareholders to make their own decision and give them the freedom to sell if this isn't for them. He continues that it is best to preserve cash for the business and to grow the business with that cash rather than effectively say "we are giving up" because "that's the last thing we are going to do." Notwithstanding LK's protestations, CERP have in fact given up on their previous plans which have seen their share prices progressively drop from 7.175p on 13 Oct 2017 to 1.8p or 2.33p if calculated from 0.803 x 2.9 (BPC's price at the time of writing). Past promises and this abysmal performance have been forgotten to be replaced by a 30% drill chance now touted as the best opportunity for CERP. It's probably better to put any spare cash into Premium Bonds with prize winning odds of 24,500 to 1; at least your moneys safe and you've got the monthly exitement of the draw.
Further to my posting yesterday and Robinson2018's web reference, the key to a successful deal will be the realistic assessment of the average depth of overburden. If this is understated, it could ruin the long term profitability of the deal; it is hoped that the BOD will err on the side of caution.
The latest RNS gives us all cause for real hope with most of the operational risks being placed fairly and squarely in ILTL's lap as long as the negotiated pricing is right for the removal of overburden, quarrying/processing and sale of coal. At last, it seems that someone in EDL has recognised that they have historically employed a surfeit of well intentioned staff with little relevant experience. Inevitably, they proved incapable of setting up an efficient coal excavation and processing operation in a remote greenfield site.
Have overseen quarry production in desert and tropical locations around the world from greenfield sites, opening them up for quarrying, installing the crushing plant leading to the subsequent production throughout the year mostly producing concrete and base course crusher run aggregates. The following standard criteria were always utilised: -
a) siting the magazine well outside the projected range of the blasting
b) erecting the crusher setup as close as possible to the quarry face but safely outside the blasting range reconciling safety requirements with minimising haulage from the quarry face
c) constructing good haulage roads both to and from the crusher set up to protect the haulage tackle and allow limited production and delivery in the wet seasons as the tropical rainfall mainly comprises short convectional bursts around 4 o'clock in the afternoon for one or two hours. To put it in perspective, the rainfall in Rukwa is just less than 40" per annum which is the same as Manchester albeit concentrated over 4-6 months in the wet season.
Extrapolating from the RNSs, it appears that the standard criteria were ignored, albeit explosives may not necessarily be required for excavating the ROM, and the crusher set up was located close to the inferior coal outcrop. This has resulted in a long haulage road to the northern and superior outcrop which has proved difficult to maintain in the wet season.
The first job in the dry season must be to build an adequate haulage road to the north outcrop and to the aggregate exit routes sufficient to enable crushing and delivery throughout the four wettest months; albeit at a lower availability with dry season stockpiling for processing in the wet season considered.
I don't know the detailed logistics of the operation BUT the costs of this additional and unnecessary haulage will be considerable over the projected life of the contract and must be reviewed if increasing the processing capabilities are considered necessary at some point. In this respect, the screening plant is the likely to be the critical item as it processes all the ROM rather than the washer crusher which only handles a fraction of the ROM after the fines have been removed by screening.
The RNS appears to be more of the same with the new managers offering pot loads of jam tomorrow based on unrealistic projections. My comments on this are as follows: -
- Reinstatement of an on-site operational advisor with extensive coal experience and historic involvement in the Project - Comment -Presume this the re-instatement of an operational advisor who oversaw the pitiful historical production; hardly a testimonial to shout about.
- A detailed review and assessment of the wash plant has been completed with minor plant modifications being made. The wash plant is now operating again and continuous production is targeted for early March 2020 - Comment - The improvements to the wash plant will have minimal effect on the production of washed coal which is limited by the excavation, haulage and screening plant capacities. It is worrying that this isn't recognised by management after all the experiences to date.
- Critical spares including new belts have been ordered which are expected to reduce any future downtime - Comment- It is hard to believe that belts are defined as critical spares as these are run of the mill consumables whilst crusher jaws and cone crusher wearing parts have predictable usage criteria.
- A stockpile of approximately 6,000 tonnes of unwashed run of mine ("ROM") coal, which was mined from the southern pit at Rukwa, has been established adjacent to the wash plant; and - Comment - This represents less than a week's ROM to meet the target of 10,000 tonnes of washed coal per month; hardly a game changer.
- The region is experiencing one of its wettest "rainy" seasons in many years. Accordingly, as the Directors believe that all economic coal has now been recovered from the southern pit, equipment will shortly be relocated to the northern pit and mining and hauling activities will be undertaken during periods of dryer weather. Based on the Company's previous experiences, the rainy season is expected to end in late April. - Comment - There appears to be four wet months, 2 medium wet months and 6 dry months with a total average precipitation of about 37 ins which is the same as Manchester although concentrated in 6 months rather than the full year. It isn't going to change and this must be factored in and 10,000 tonnes per month over a full year may need production of say 15,000 tonnes in the dry season to average the lower production which can be expected in the rainy months.
NOTE: Average Sumbawanga precipitation is about 934 mm | 36.8 inch per year.
Can anyone explain the rationale of Zenith Energy, the dual listed international oil & gas production company, deciding to spread its wings to Norway and possibly elsewhere having
failed abysmally in its operations in the largest onshore oilfield in Azerbaijan over the last three or so years during which time the share price has dropped from 12.5p to circa 2p
The capacity of the screening plant is not known but from RNS Number : 6762X the percentage of saleable washed coal from the ROM is 5,239/17530 which equals 29.88% say 30% and thus to meet a production target of 10,000 tonnes saleable coal per month, the screening plant would have to process 33,333 tonnes per month. Working 12 shifts x 10 hours per week for 4.33 weeks (average month) at a 70% plant availability, the screening plant throughput would need to be 33,333/120 x 4.33 x 0.70 or approx 90 tonnes/hour; the reduction to 70% availability is necessary to allow for possible ROM loading & truckage shortfalls at the coal face; pre-screening plant blockages; regular preventative maintenance for all plant & equipment; pre-screening plant, jaw crusher, secondary & tertiary cone breakdowns; front end loader breakdowns at stockpiles; night shift inefficiencies and inclement weather. The modifications to the plant and coal deliveries from the Northern Mining Area (NMA) were all scheduled to be operational in July 2019 as per relevant RNSs so production figures with all the upgrades should now be available ex the NMA for August and September. Recent RNSs have omitted production updates but the BoD could surprise with three (3) monthly figures till the end of October exceeding expectations. I suspect, however, that the targets are yet to be attained for one or more of the following possible reasons: -
Insufficient excavation equipment at the coal face(s)
Insufficient truckage from the coal face(s) to the washing, screening and crushing plant
Inadequate pre-screening plant capacity
Delays with blockages at the screening plant despite a coal sizer being installed
Insufficient loading around the crusher/washing plant and stockpile areas
My guess is that the pre-screening plant is the bottleneck in processing the ROM tonnage required to keep the Jaw crusher sufficiently loaded to meet washed coal production targets. If this is correct it can't be resolved until a second screening plant is purchased, installed and commissioned.
NOTES: Edenville Energy PLC Rukwa Coal Project: RNS Number : 1340C 13 June 2019
Plant Upgrades: The Company is pleased to report the majority of the planned plant upgrades have now been completed, some of which are outlined below.
One of the key upgrades has been further modifications to the pre-screen, which was originally installed in January 2019. The initial introduction of the pre-screen, which removes hard to process material such as fine coal.... it will also enable a more efficient sorting of material prior to it entering the main wash plant circuit, which in turn has the potential to provide more coal for washing and a cleaner recovery as it travels through the plant...................
The RNS dated 21 Aug 2019 came out of the blue and represented another unbelievable instance of an incompetent BOD and staff totally out of their depth in quarrying and coal production.
This advised that "Edenville Energy Plc (AIM: EDL), the AIM quoted company developing the Rukwa coal project in southwest Tanzania, is pleased to announce it has taken delivery of two recently acquired 30 tonne trucks to be used in mining load and haul at its Rukwa Coal Project (the "Project") site." Utilising a modest part of the proceeds from the fund raising undertaken in May 2019, the trucks will provide the backbone of load and haul operations at the Project. As the Project expands the trucks may be supplemented with additional units. The Company has previously been relying on trucks supplied by contractors, which in the past have sometimes proved to be both an expensive and inefficient option. The two new trucks will operate on a two shift per day basis, compared to the single shift for the previous contractor's trucks, increasing the amount of coal that can be delivered to the Company's wash plant. As a result, the wash plant is expected to move to a double shift basis in the coming weeks, thereby boosting productivity at the Project.
Previous RNS's from 14 Jan '19 to 13 June '19 gave no indication that company haul trucks were necessary with EDL relying on trucks supplied by contractors as noted in the RNS Number: 8910Y on 14 Jan 2019 "As stated in the announcements made on 6 Nov 2018, 17 Dec 2018 and 20 Dec 2018, the net proceeds of the US$750,000 Initial Loan from Lind are being used by the Company for a number of purposes. This includes the purchase of a second excavator to open up the new mining area to the north of the current excavations. The Company is pleased to confirm that this second excavator has now been acquired and together with the existing excavator and four additional hired haul trucks, is in operation at the Company's Project site. These vehicles are currently all being employed to increase the amount of material being mined from the existing pit, but the newly acquired second excavator and associated haul trucks will shortly move to the new northern mining area to begin opening this up. The mobile in-pit lighting to allow 24 hour per day operation in the existing pit has been installed, further increasing the Company's mining capacity".
The 14 Jan '19 RNS had noted that the requirement for extra trucks was being handled by the four (4) additional trucks with no mention of a need for company purchased haul trucks NOR was it advised in the RNS dated 14 May 2019 NOR in the RNS dated 13 June 2019 which advised that the first coal deliveries to the plant from the Northern Area were scheduled for July 2019.
PS No production figures given post the plant upgrade etc; let's hope the board surprise us.
Very disappointed with the Pro-Active Investors interview with Dave Ryan of Powerhouse Energy who no doubt is technically excellent but does not appear to have the clarity of thought of a Chief Executive bent on translating the two dozen or so current interests into DMG sales/hosts deals. His ambitions were limited to ultimately receive revenue and in the medium term "even make a profit" whilst the number of interested parties moved from a dozen to two dozen during the interview which reflected badly on his grasp of the market. Our thrust should be to complete the commercial trials, set up a supply chain, sell or license the DMGs and provide any necessary technical input for potential customers. If we stray from these objectives, our momentum plus technical lead will be lost to be overtaken by others with clear monetarisation objectives.
It is extremely positive that the wash plant has started batch processing of fine coal stockpiles through the pre-screen, which has enabled approximately 40% of the fine coal stockpile to be reclassified as sized coal product, available for washing or direct sale. This could be the crucial turning point for the operation. One wonders, however, why the initial processing over a number of months was such that 40% of the fine coal stockpile can now be reclassified as washed saleable coal.
It is extremely positive that the wash plant has started batch processing of fine coal stockpiles through the pre-screen, which has enabled approximately 40% of the fine coal stockpile to be reclassified as sized coal product, available for washing or direct sale. This could be the crucial turning point for the operation. One wonders, however, why the initial processing over a number of months was such that 40% of the fine coal stockpile can now be reclassified as washed saleable coal.
The 'jam tomorrow' brigade are only asking to be treated like intelligent adults and to be given solid information. This would include a precis of the Sept 2018 updated mine plan with the revised layout of the plant including all the additions to give confidence in production targets and EDL's future. What we have been given to date has been based on wishful thinking and management's poor appreciation of quarrying and crushing activities which has inevitably resulted in very poor historical production.
Another RNS which again promises jam tomorrow but doesn't spell out how the production is going to be raised from 1,250 tonnes per month to 10,000 tonnes per month but merely advises that the Company's mining consultants, Sound Mining Systems (SMS) of Johannesburg (think it should be Sound Mining Solution (Pty) who are an affiliate of The Southern African Institute of Mining and Metallurgy) completed an updated mine plan in September 2018. It would be useful to publish relevant extracts from this updated mine plan to give us all a little more confidence that the outputs can be achieved.
I will never understand the EDL share price with a circa 35% rise on the back on a RNS which re-iterated previously unfilled promises of jam tomorrow when the additional equipment is installed. I anticipate a significant increase in production when all the modifications are working but it is impossible to gauge whether the eventual target of 10,000 tonnes of washed coal per month is possible from the kit on site from the broken down specification of the excavated material and I have seen no tests on the excavated material on the new quarry area which give me any confidence that this breakdown will improve. The lamella plant adds very little to the equation and the success or failure of the operation is whether the excavators/trucks and the primary crusher can handle roughly 37,000 tonnes of excavated material (ROM) per month required and assuming that the waste is diverted whether the screening plant can process around 26,500 tonnes post jaw crusher to give10,000 tonnes of washed coal. All these figures are based on the latest RNS output figures namely: - From 1 January 2018 to 24 May 2018 (4.77mths) approximate numbers show 20,634 tonnes of Run of Mine coal processed, producing 5,665 tonnes of washed coal and 9,285 tonnes of fine coal. These ROM figures need to increase almost ninefold to meet the targets which is quite an undertaking.
okenia
I'm struggling to reconcile your figures and maybe I've got my units mixed up but 50,000 lb of copper concentrate per annum multiplied by a price increase of 50c gives me $25,000 not $25,000,000. Should it be 50,000,000 lbs per annum
block making better described as coal brickettes
aerial: - must apologise to you if I missed any post which alluded to poor quality of the coal. This issue, however, is that the coal material grade post primary and secondary crushing gives only 40% saleable washed coal with the 60% balance currently non saleable fine coal. This could be mitigated if the sale of the fine coal could be arranged for say block making, albeit at inferior pricing.