Lemur Resources Limited (“Lemur”) is a wholly owned subsidiary of Bushveld Minerals and is the company’s coal and power platform. The company’s flagship project is the Imaloto coal mine, which is located in the southwest of Madagascar and has four exploration permits and one mining and exploitation permit covering a total area of approximately 81.25 square kilometres. Lemur has the only coal mining exploitation licence in the country. In 2012, Lemur took the decision to expand the scope of the project from coal mining only to include a 45MW coal power plant and a new 200km transmission line, developed in parallel as one of Madagascar’s leading independent power producers.

The Imaloto project is located in the Sakoa Basin in the south-west of Madagascar. It has a total of 136Mt JORC-compliant mineral resource (2012), of which 92Mt is measured. A valuation study completed in 2014 showed a positive NPV (10% real discount rate) of US$36 million for an operation with a capacity of up to 1.5Mtpa with a 19-year mine life and initial capex of US$12 million. In addition, Lemur has two exploration permits covering a combined 87.5km2 in close proximity to the Imaloto project.

Since 2008, Lemur has invested approximately US$10 million on developing the project. From a geographical location and development phase perspective, the Imaloto Power Project is perfectly positioned to address the persistent power supply challenges that Madagascar faces as a country – especially in the less developed southern region. The Imaloto project is located in an area of Madagascar that is far from the country’s hydro power stations (located in the north) and is in need of power both for the inhabitants and an emerging number of mining operations. The southern region currently does not have a power grid and is almost entirely electrified by isolated generators (Gen Sets), with a combined capacity of no more than 20MW.

The initial revised 60MW capacity of the Imaloto Power Project will substantially increase generation capacity, create a southern power grid and provide a reliable source of high-quality electricity for residential and commercial offtakers at tariffs that are substantially lower than the current Gen Set tariffs, which retail for up to US$0.25/kWh.

Our studies to date indicate that the Imaloto Power Project tariffs will be more aligned with international benchmark tariffs of newly-built power plants in the sub-Saharan African region.

Lemur’s strategy for the development of the project involves securing an Independent Power Producer (IPP) Concession and a Power Purchase Agreement (PPA) for a thermal coal-fired power station next to the coal mine, thereby providing a captive market for the Imaloto project run-of-mine coal. The company is in discussions with the Madagascar authorities regarding the Concession.

After concluding an MoU with Jiro Sy Rano Malagasy (JIRAMA), the national power utility, the company has been in discussions with JIRAMA regarding a PPA, which will allow the next stage in the development of the project to be implemented as an integrated mine to power and transmission projectproviding a captive market for its coal resource and unlocking the intrinsic value in the underlying project.

Apart from JIRAMA, Lemur is simultaneously in discussions with various private mining and industrial companies for potential power offtake for the power plant.

In 2013, the company completed the following technical studies:

  • Pre-feasibility study for a 45MW power plant;
  • Pre-feasibility study for a 200km transmission line;
  • Scoping study for the coal mine (following the completion of a full drilling programme).

In March 2017, the company finalised an MOU with PowerChina and its subsidiary Sinohydro to cooperate on a technical and, potentially, financial basis in the development of the 60MW power project.

Pursuant to the signing of the MoU with PowerChina, a delegation of PowerChina’s technical team (consisting of 13 engineers from PowerChina’s headquarters) undertook a site visit in May 2017 to, among other things, investigate the potential site for the power plant. The site visit marked the final stages of work before the commencement of the BFS and subsequent construction phase, which is subject to financial close and currently expected within the next 18 months.

Furthermore, Lemur is in discussions to appoint an Owner Engineering team to guide the various studies that constitute part of the BFS for the power project to be jointly funded with PowerChina.

On the mining side, the company is in discussions with a number of mining and mine services companies regarding strategic partnerships in contract mining and coal processing services.

Lemur has also started discussions with potential domestic industrial offtakers of coal. The company expects the coal supply offtakes to commence before the power plant starts operations, thus providing early cash inflows and revenue diversification over the life of the project.

Finally, Lemur has initiated preliminary project finance discussions with financial institutions, which it will progress upon the successful completion of a favourable BFS by PowerChina.

Overall, the plant commissioning date is expected in 2020/21, subject to approvals and financial close on approximately US$200 million of funding.


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