IEC update on Tanzania mining operations

Highlights

• June production maintains level of 600 000 tpy.
• Sales continue to be steady with increased exports identified.
• New Crusher and Screen Plant purchased.
• Changes in mining legislation unlikely to affect Intra Energy.

Intra Energy Corporation Limited ('IEC' or 'the Company') have announced that Tancoal Energy Limited (IEC 70% and National Development Corporation of Tanzania 30%) has maintained the solid performance in June 2017 with production of 49 154 t together with sales of 45 320 t, compared with June 2016 production of 19 992 t and sales of 20 006 t.

Sales were steady but were lower than expected which reflected the continued impact of the slowdown in cement usage. It is believed that this slowdown can be attributed to both a weaker economy and seasonal rains delaying infrastructure projects requiring the use of cement. It is expected that the market will show improvement now that the rains have subsided.

The new crusher and screen plant is expected to be in operation before September; the crusher will give a steady supply of coal for customers and enable the company to meet the increased demand from the East African manufacturing customers for sized coal. It will also allow Tancoal to reduce costs by eliminating its current double handling of coal. In addition, the new crusher uses rollers instead of impact which reduces fines significantly and will help lower moisture during the rainy season and allow greater capacity to screen products for customers with customised sizing of their coal.

During June Tancoal received a MMU (Mobile Manufacturing Unit) allowing the use of Heavy Anfo and Emulsion for blasting. The process improves fragmentation and hence increases the productivity of excavators on site. This also allows the blasting of wet holes and increases the spacing of drill holes which decreases the amount of drilling and reduces costs.

Talks were renewed with SinoHydro regarding the letter from the Minister of Energy and Minerals to move ahead with the Ngaka Power Station Project that was received in May. It was agreed to renew the MOU between Sinohydro, NDC and IEC while seeking an indication from Government as to equity requirments which, if subject to new legislation, may make financing of electricity development in Tanzania difficult.

Current exports are about 10 000 tpm between Kenya and Rwanda and this is likely to expand to 18 000 tpm after September. New sales prospects have been identified with potential exports of up to 25 000 per month to Zambia, Uganda, Kenya and Madagascar.

In June the Tanzanian Government enacted legislative changes to mining and energy which included the provision of equity to the Government and the potential renegotiation of Mining Development Agreements. These changes seriously impact the mineral mining industry and may be likely to restrict new investment in Tanzania. As Tancoal is already 30% owned by the Government of Tanzania through the National Development Corporation, and does not have Mining Development Agreements it is considered that the changes will not have any impact on IEC and the Ngaka coal mine. There may be additional imposts applied to exports but the Company consider these as minor.

IEC Chairman, Graeme Robertson, commented:

"June represented a continuation of our recent production and sales increases with the additional costs of this financed from cash flow. Productivity improvements and new crushing equipment will support further expansion of capacity. Although sweeping changes to Tanzania's natural wealth and resources landscape is expected to significantly impact the mineral mining and oil and gas industry in Tanzania, we intend to continue with our mission as the prime coal supplier in support of the Government's industrialisation programme with a mine that is 30% owned by the Government and a 100% Tanzanian workforce."

Read the article online at: https://www.globalminingreview.com/mining/13072017/iec-update-on-tanzania-mining-operations/