Minergy will focus on selling coal directly to industrial end-users based in southern Africa.

Demand for the correct coal size, quality and consistent supply remains high. Minergy will focus on ensuring industrial customers across southern Africa receive this steady volume and quality of coal.

REGIONAL INDUSTRIAL MARKET

The smaller fraction product (<8mm) or “duff” will be targeted for sale on longer-terms contracts. In this regard, Minergy has, post year-end, concluded an off-take agreement with a South African cement producer for a minimum value of P240 million over the next three years.

The sale of larger fraction (“peas” and “nuts”) on short-term contracts and on a spot basis will be pursued. Various customers are currently trial-testing product. The Company will focus on ensuring industrial customers across southern Africa receive this steady volume and quality of coal. This sales strategy affords Minergy exposure to local pricing, which is more stable than international spot prices.

Minergy’s target market is depicted in the graphs alongside indicating that in South Africa the industrial market, according to the SA Coal Report 2018, comprises 29MT and this industrial component is broken down into domestic trades, industrial, steelworks, chemical, cement and other — this is the Minergy target market.

POWER GENERATION

The Group has coal seams with the necessary qualities to supply coal for power generation.

EXPORT

The qualities of produced coal are attractive to export customers. Depending on the availability of adequate rail infrastructure such as the proposed Lephahale link between Botswana and the Waterberg region of South Africa as well as favourable seaborne thermal coal prices, Minergy may enter into agreements with established international coal traders on a free-on-mine basis.

Accessing both the power generation and export markets will require Minergy having to establish an additional processing and washing plant and develop new box cuts. However, these opportunities will only be considered once Minergy has a steady supply and additional off-take agreements with industrial users.