Keaton Energy is sanguine about the prospects of securing export allocation at South Africa’s Richards Bay Coal Terminal as it pushes ahead with its first mine to supply power utility Eskom.

Mr Paul Miller MD of Keaton Energy said that Keaton’s key area of focus for its small team of 7 people is to bring the Delmas mine into production and there are a number of key issues that have to be more or less brought to a point for that to happen.

The Department of Minerals and Energy has suggested that the mining right Keaton applied for a year ago is close to being issued for the project, where the coal is suitable for Eskom but not for the export market.

It said that you don’t create value up the curve by wishing for it Keaton is also finalizing technical work on the project for it to approach Eskom to set up long term off take agreement talks for output from the mine which has 178 million tonnes of in situ coal.

It should take 5 years from the first exploration hole to production from an opencast coal mine. Keaton is hoping to do it in 2.5 years, but it’s proving a very tough task.

Mr Miller said that “You don’t create value up the curve by wishing for it. It takes a lot of hard work and a lot of money. We are now at a crucial time. Our feasibility, mining rights and contract talks are coming together but we’re not there yet.”

He said that Keaton has been able to preserve much of its ZAR 380 million cash it had on hand at the end of it interim period at end of March 2008. It’s been able to do this by generating income from its small Klip colliery to cover overheads.

He added that the mine, which started production last October, should be depleted by year end, but it has proved to be an invaluable learning centre for the company.

The roughly ZAR 380 million is enough to build the Delmas mine and bring it into production, leaving the JSE-listed Keaton with a comfortable buffer for possible over runs.

sourced : Miningmx.com

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