4 Apr 2011 07:00
4 April 2011
Strategic Natural Resources PLC ("SNR" or the "Company")
Signing of an Exclusive coal off-take agreement
Strategic Natural Resources PLC (AIM:SNRP) is pleased to announce that it has signed an exclusive coal off-take agreement (the "Off-take Agreement") with Trasteel International SA ("Trasteel"), a global steel supplier and commodity trader. The finalisation of the contract is the result of many discussions with various parties introduced to SNR by their appointed coal brokers, London Commodity Brokers ("LCB").
The Off-take Agreement is in respect of 100% of the beneficiated coal to be mined from SNR's Elitheni coal mine in the Eastern Cape of South Africa (the "Elitheni Mine") up to an initial 2.0 million tonnes (+/- 10% at Trasteel's option).
The Off-take Agreement is based on a 5500 Kcal/kg coal, FOB Port of East London, using the API4 price as a reference. The API4 is the benchmark price for Steam Coal exported from Richards Bay in South Africa, as published by Argus McCloskey for a 6000 Kcal/Kg coal.
The first shipment under the contract will be loaded in June 2012, with 500,000 tonnes of coal (+/- 10% at Trasteel's option) scheduled to be shipped during the following twelve months. The balance of the coal (being 1.5 million tonnes (+/- 10% at Trasteel's option) is scheduled to be shipped before the end of the calendar year 2014.
In addition, Trasteel has been granted a right of first refusal, on terms to be mutually agreed between the parties, on any coal produced in excess of the initial 2.0 million tonnage covered under the Off-take Agreement.
This initial order represents less than 1% of the already proven Elitheni coal deposit, being a 150Mt SAMREC compliant resource as previously announced. The Company will be looking to negotiate further sale agreements, not only utilising its existing proven deposits but also from further coal discoveries on its property which it anticipates, and which will be subject to the results of its recently announced exploration programme.
The coal from the Elitheni Mine will be shipped through the Port of East London in the Eastern Cape of South Africa. SNR is in advanced discussions with Transnet Port Terminals, the South African national ports authority and operator, about building coal handling facilities at the Port of East London. The coal will be delivered to the port using a combination of road and rail transport, given the close proximity of the mine to the port. SNR is currently in discussions with Transnet Freight Rail, the national rail operator, about upgrading the rail link between the Elitheni Mine and the Port of East London.
The Company has developed a detailed mine development and logistics plan to ensure the successful delivery of coal as required under the Off-take Agreement.
David Nel, CEO of SNR, commented: "We have worked hard over the course of many months to find the right partner with which to develop the Elitheni coal mine and to commence coal exports and we are delighted to have signed an agreement with such a well respected company as Trasteel. We are also very thankful for the roles played by LCB and Ports of Africa in this transaction. We have a major coal resource and are confident that this will be the start of a fruitful relationship with Trasteel and the commencement of many years of exporting coal, firstly through the Port of East London and in the near future through the new deep-water port of Coega. We are committed to delivering against this off-take agreement with the same passion and determination to succeed that has carried the company thus far, values we know Trasteel share."
Trasteel CEO, Ivo Conti commented: "Trasteel is proud of this off-take agreement and it is looking forward to strengthening its relationship with SNR."
About Trasteel:
The Trasteel Group was founded in September 2009 and has experience in the steel and raw materials business. The strategy of the Trasteel Group is to invest in assets in the steel, raw materials, non-ferrous and refractory industries as well as in shipping, in order to support the trading side of the business and to develop a multitasking and flexible company able to provide a full service to the client, including financial facilities, an engineering consultancy, and to create synergies along the value chain in order to maximize efficiencies and create alliances with suppliers and end users on a joint venture and off-take agreement basis. The Company's headquarters are in Lugano, Switzerland, while other operating offices have been opened around the world: two in China, Indonesia, India, Dubai and South America. There are also agents covering markets in North America, Canada, Russia, Ukraine, Turkey and Egypt.
For further information, please contact:
Strategic Natural Resources plc David Nel, Chief Executive Officer Jeremy Metcalfe, Communications Director |
+27 (0) 41 368 9650 +44 (0)7785 346 718 |
Nominated Adviser and Joint Broker - Allenby Capital Limited Nick Naylor / James Reeve |
+44 (0) 20 3328 5656 |
Evolution Securities Chris Sim / Romil Patel |
+44 207 071 4300 |
Joint Broker - SP Angel Corporate Finance Limited Emin Eyi / Tercel Moore |
+44 (0) 207 647 9646 |
Financial Dynamics Billy Clegg / Oliver Winters
| +44 (0)207 831 3113 +44 (0)77 0332 9024 |
London Commodity Brokers Clive Murray
| +44 (0)207 240 1112 |
Trasteel International SA Enrico Corvetto | +41 (0)91 910 5300 |
For further information about Strategic Natural Resources plc please visit www.snrplc.co.uk.