MC – $7.5m
SP – 15c
Shares – 50m
Options – NQ
Cash – $7.6m
I don’t know alot about Coal Bed Methane in South Africa, but that MC:Cash ratio of 1:1 is too appealing not to keep an eye on. Fits all the right criteria in term of capital structure, but requires further investigation into the project.
Ermelo Right not being commercial is a concern.
Some information on CBM and attitudes towards it in S Africa.
http://www.polity.org.za/article/coal-bed-methane-the-alternative-energy-source-2010-08-24
Sunbird has a portfolio of five CBM projects covering an extensive area (8,647km²) of prospective coal basins across southern Africa, where an abundant coal resource, limited domestic gas supply and growing energy needs have created significant opportunity for the development of large scale energy projects.
Sunbird has a strategic alliance with African joint venture partner Umbono Capital Partners (Proprietary) Limited, which provides Sunbird with an experienced operational team and new project pipeline.
Sunbird is conducting a phased exploration program that will define the resource base and demonstrate the commercial potential of its portfolio of CBM assets which contain a Best Estimate Gas-in-Place of 5.3 Tcf (Trillion cubic feet) and up to a High Estimate of 29.2 Tcf
Ermelo Project
In March 2012 the first well was spudded in a core hole drilling program aimed at assessing the resource potential of the Ermelo project area. The drilling program was completed in June 2012.
Samples from the coal seams in each core hole were collected in order to undertake gas desorption analysis to determine their gas content. Additionally, each core hole has undergone geophysical logging to assess the reservoir characteristics of the coal intervals.
While desorption analysis is ongoing, initial results indicate that due to the uplifted nature and shallow depth of the coals in the existing Ermelo Exploration Right, gas contents are lower than anticipated and may not support commercial development. Sunbird will continue to assess data from the core holes as results are received over the coming months.
Sunbird’s focus in the Ermelo area will now be on the Ermelo West Application area where the coals are at greater depth and have the potential to deliver a commercial gas resource. A technical review of the core hole results and the existing data set will enable planning of future exploration activities to be undertaken once the Exploration Right is granted.
Ermelo is located in the Witbank coal mining region of South Africa about 200km south east of Johannesburg. The project is strategically located to established infrastructure and is traversed by the Sasol Gas Pipeline. The Ermelo Project area is composed of the Ermelo Exploration Right covering 646 km² and the Ermelo West Application covering 797 km², and is held by Sunbird (74%) and Umbono (26%), Sunbird’s South African joint venture partner.
Mopane Project
Following an aeromagnetic survey in late 2011, interpretation and geological desktop studies have been completed at Mopane.
These studies have increased the potential for successful exploration and development of a large scale CBM project. To more fully evaluate the project, the drilling program has been expanded from three core holes to up to eight core holes commencing in August 2012. It is expected that this will enable Sunbird to accelerate the definition of the resource base and commence pilot drilling in 2013.
The coal seams within the Mopane Basin are the equivalent formation and similar in quality to those that have been successfully developed for CBM production by Anglo American in the neighbouring Waterberg Basin, where a 1 Tcf (Trillion cubic feet) CBM resource has been defined. The target Ecca coal package, based on drilling results from within the Mopane licence, provides a net coal thickness of over 32 metres at depths greater than 400 metres
Studies have shown that these extensive coal deposits combined with favourable depth, provide significant resource potential across the Mopane Project. Independent Experts have determined that the Mopane Project has a Best Estimate Gas-in-Place of 1.9 Tcf with a High Estimate of 13.66 Tcf.
Mopane is located in the Limpopo Province of South Africa about 420km northeast of Johannesburg. The project lies on the western limit of the Tshipise Coalfield which contains coal projects owned by Rio Tinto and Coal of Africa. Mopane is traversed by major electricity transmission lines that form part of the Southern African Power Pool and is also close to major local mining and mineral processing facilities. With a licence area of 1,577km², the project is held by Sunbird (74%) and Umbono (26%).
Springbok Flats Project
Following detailed technical and desktop assessment of 600 exploration bore holes at Springbok Flats, a core hole drilling program has been planned to assess the resource potential within the permit area.
An exploration drilling program to provide gas content, geophysical logs and permeability data is due to commence in the fourth quarter of 2012 with three core holes planned. Environmental studies and approvals are underway.
Springbok Flats is located 150km northeast of Pretoria in northern South Africa. The area is considered favourable for the occurrence of CBM due to the presence of extensive coal deposits and depths adequate for CBM development and preservation. In March 2012 Sunbird applied for 1,257km² of additional exploration acreage contiguous with its existing Springbok Flats licenses. Once this application is granted, the combined Springbok Flats permits will be 2,456km² held by Sunbird (74%) and Umbono (26%).
Kinetiko Energy is another ASX listed company with CBM interests in S Africa.
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