ALAN GOLDING

ANALYTIKA HOLDINGS (PTY) LTD

Exploration Management, BOTSWANA

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In April 2011 the Government of Botswana imposed a moratorium on the granting of coal (energy) exploration licences due to the intensity of applications and renewals, conflicts between coal and uranium licences.

There was also a desire for the Government to take stock of its position with regard to the development of these resources for the benefit of the nation.

During this period the security of the existing licences was guaranteed and work programmes continued unabated. In fact 2011 was probably the most intense period coal exploration in Botswana.

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• Moratorium Lifted.

• Tendering procedure to be instigated for areas with

known resources, this area to be defined.

• Other areas available to normal application procedure.

• Declared intention to develop Botswana’s coal resources

based on exporting beneficiated product with the level of

export set at approximately 60mt pa.

• Prospecting licence unit to be re-located to Department

of Mines

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Before any licence application could be issued the

restricted area had to be legally defined by publication

in the Government Gazette.

When applications were accepted they could not be

processed because the exclusion area was not

defined which was not resolved until August 2012

The transfer of the PLU to Department of Mines was

delayed November 2012

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The level of exploration (which often equates to FDI) has fallen significantly.

The Government has expressed a wish for larger mining houses to become involved in coal exploration and development in Botswana.

The tendering of areas within the restricted block has only produced one tender (Mmamabula Central and South) and this area had been earmarked for competitive tender some 3-5 years previously so it was not new.

But larger mining houses tend not to undertake grassroots exploration anymore but prefer to buy out junior mining companies who have taken all the risk and located a resource that warrants development.

Buy introducing an element of uncertainty existing junior exploration

companies will continued to try and fulfil their obligations but in an atmosphere of uncertainty in terms raising finance and the long term security of their tenure and therefore the stock and quality of resources available to larger mining houses will stagnate.

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The processing of Prospecting Licences (outside the exclusion

zone) remains under resourced and applications and renewals are

taking 12 months or longer.

There has been no engagement between Government departments

and industry as to how areas can and will be tendered.

The Department of Mines implementing the relevant sections of the

Mines, Quarries and Works Act and is doing so in such a manner

that it is proving that it does not understand the nature of

exploration works.

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60mt pa annum export target

Rail link through Walvis Bay by 2019 (as long as the normal PL tenure)

Rail link to Ponto Technobane ??

Will require production in the order of >100mt pa or 20-25 mines of 5-4mt pa. all coming on line in the same time frame.

Does Botswana have the human and financial resources to achieved this?

Does the Department of Mines have the capability to process the mining licence applications and monitor the works?

What will be done with the 40mt of Middlings from the production of export quality coal??

Middlings cannot be used for internal power consumption as the current plan esssentally binds us to use Morupule coal

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Large resources of coal

Limited infrastructure for true exports of 2mt pa

Neighbours with an immediate and medium term shortage of power.

Neighbours with a possible need for coal for power generation

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Coalfield Tonnes (Mt) (1998)#

Defined Published Resource Figures (Mt)

M/Ind/Inf

Location

Dukwe 1,604 +1,969 +1,500 Exploration Target

Sowa/Dukwe

Foley 6,860 3,377+860 3-6,000 Exploration Target

Sese & Mabesekwa

Serule 9,685 915 +3,900 Exploration Target

Lechana & Tshimoyapula

Bobonong 179 None declared Poorly explored

Morupule 18,072 190 7,234 2,400

MCL Kgaswe Morupule South

Moijabana 3,539 1,460 +5,000 Exploration Target

Moijabana Kweneng

Mmamabula 23,213 2,925+442+2,512+ 3,144+2,493

MME/MMNC/MMS/MMW

Mmamantswe 2,898 1,300 Mmamantswe

Letlhakeng 70,353 4,230+2,654 Takotakwane remainder poorly explored

Dutlwe 71,740 None declared Poorly explored

Ncojane 4,725 None declared Poorly explored

Total 212,868 60,021 (28%)

Exports through this route are practical.

Railways are in desperate need of bulk transport.

Problem is essentially an issue of issue of cost and logistics dealing with three railway companies.

Could be resolved as is win-win situation for all parties

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Morupule colliery is showing the way and has increased is exports of coal by 70% over the last year or so.

Current power generation capacity expanded to meet modest oversupply with sales into SAPP

Consideration be given to removing BPC’s monopoly of power sales to industry

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Morupule B units 5 and 6 to be supplied by two or three new suppliers with yearly contracts of 1mt. This will form the foundation stone of three new mines.

Export their high grade coal via the 2mtpa link.

The same mines should also be in a position to break into the local export market as Morupule has done allowing them to expand capacity.

These mines would also form the training ground for the development of the human resources required for any major mines.

The resulting mines could then operate at 1.5-2.0mtpa

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The proposed new 300Mw would not be one of the suppliers to the Morupule B units 5 and 6 but will be, as envisaged at a new location, and will form the new forth mine.

It could export their high grade coal via the 2mtpa link.

It would also be in a position to break into the local export market to expand capacity.

By this variation Botswana will have in the short term five coal mines not the one or two currently envisaged and be in a much stronger position to make the quantum leap required in 2020.

These mines would also form the training ground for the development of the human resources required for any major mines.

The resulting mines could then be producing a modest 10mtpa but could all readily expanded to 4-5mtpa or more i.e. 25mp

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The plan would not be dependant on the volatile export market but given producers the comfort of a guaranteed local market with their expansion following their own efforts as Morupule has shown the way.

Would not require massive infrastructure development to work.

Development of Botswana’s generating capacity to 100% of demand with capacity for future demand and modest export capacity.

Allow for Botswana to break into the export market in a modest way.

The granting of Mining leases over the investors coal deposits would grant them long term security of tenure.

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Alan Golding

ANALYTIKA HOLDINGS (PTY) LTD P.0. Box 401898

Gaborone

BOTSWANA

Tel: +267 391 8323

Fax: +267 391 8378 Cell: +267 724 17 627

Email: alan@analytika.co.bw