The Rietkuil project has a SAMREC compliant gross in-situ tonnage resource of (156.9Mt in Measured and 42Mt in Indicated categories) consisting of bituminous coal, lean coal and pseudo anthracite.  The project is located 80km east of Johannesburg, 8km south of Delmas and is adjacent to Exxaro Resources Limited’s Leeuwpan Colliery and Kuyasa Mining (Pty) Limited’s Delmas Colliery, situated in the Mpumalanga Province.

A Bankable Feasibility Study (‘BFS’) was completed in May 2011 by SRK Consulting, which refined the information in the 2009 Feasibility Report to an accuracy of ±10% and highlighted the salient facts with the objective of establishing the optimal path to production at Rietkuil.  The BFS established the requirements, design criteria and preliminary design for an efficient Beneficiation Plant delivering 2.6 Mtpa of coal product for local, export and thermal markets over a minimum 30 year life of mine (‘LOM’).  The BFS also supported an IRR of 17.2%, a payback period of five years from the commencement of construction and estimated initial capital expenditure of R906 million.

Rietkuil has the benefit of being in close proximity to established infrastructure including rail and roads linking the mine to the port of Richard’s Bay and domestic clients.  The project has been allocated a rail siding number, further improving access to export markets.  Importantly, Rietkuil is also located approximately 30km from the nearest Eskom power station, and a tender has been submitted to become one of Eskom’s preferred suppliers.  Eskom is South Africa’s largest consumer of domestic coal, and it is Sable’s intention to target Eskom as a major off-take customer for its power station grade product.

The Company is currently in an advanced stage of negotiations with Quattro and Transnet to secure rail and harbour allocation.  The Company remains optimistic that these negotiations will be concluded in due course.  The BFS is predicated on selling 50% of the saleable product to domestic markets.  However, the Company is negotiating to obtain sufficient rail and harbour allocation for up to 90% of product.  As export prices are significantly higher than domestic prices, the increase in rail and harbour allocation, if achieved, should result in a substantial increase to the NPV of the Project.

In addition to the resource on Rietkuil, the Company has initiated exploration drilling on the adjacent farm Matjiesgoedkuil 266IR.  The initial drilling results indicate similar coal as present on Rietkuil Mine. The addition of this resource will extend the LOM beyond 30 years and further improve the economic fundamentals of the wider Rietkuil project.