Strategic Natural Resources (LON:SNRP) , the AIM listed mining group behind the development of the Elitheni coal project in South Africa, is set to launch a new drilling and exploration programme in April. The company has earmarked around US$2.5 million to the work with the aim of increasing and improving the resource categorisation across all of its various rights areas.

In an interview with Stockopedia earlier this month, communications director Jeremy Metcalfe said he was keen to bolster the resource at Elitheni, which currently stands at 150 million tonnes despite only 3% of the project having been drilled. With the new drilling programme, SNR wants to increase the mineable resources available in its Phase 1 and 2 areas as well as explore for coal in the Phase 3 area, in order to verify an earlier report of possible coking coal deposits in there. The programme will also involve exploring for coal in the Phase 4 area and drilling and exploration of the large Phase 5 area, west of the company’s current operations, in preparation of a possible export feasibility study which it aims to commence over this area in 2012. Progress reports on the new work are expected later this year.

David Nel, SNR’s chief executive, said: “We are confident that we have a great deal more coal resource available for exploration and, to aid our export strategy, I am pleased that we have allocated this initial budget to progress this drilling and exploration programme. We hope to update our shareholders with an increase in resource, improved resource categorisation and some special coal qualities.”

Investors in SNR are currently awaiting the outcome of off-take negotiations being held between the company and potential buyers of its anthracite coal. While South Africa’s stretched power network is understood to be a likely route for some of the coal, buyers in emerging markets such as India, China and Indonesia are also expected to emerge. The Strategic Natural Resources share price dipped by 1.7% to 21.25p in early trading.

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