Gaborone — Dual-listed energy concern Aviva Corporation has started a $3 million reserve upgrade drilling programme at its 1.3 billion tonne Mmamantswe coal Project.

Aviva managing director Lindsay Reed said the resource estimate affirmed the project as very low strip ratio open pit thermal coal deposit.

"The resource base has the potential to supply six million tonnes per annum to both a 1,500MW power project and/or direct coal sales to the power sector in South Africa. Aviva is now focused on advancing the project through drilling to deliver a significant resource upgrade," Reed said.

The company is listed on the Australian Stock Exchange. Its head office is in Perth, Australia. It has a portfolio of energy assets in Botswana (Mmamantswe Project) and Australia (Coolimba Power Project).

Its Botswana mine is located on the South African border, adjacent to key infrastructure including, a highway, railway and high voltage transmission lines.

A statement on the company's website says that two drill rigs have been mobilised on site for a 16,600 metre drilling programme designed to upgrade 50 percent of the deposit to measured resources. The drilling campaign is expected to be complete by the end of August 2008. Final coal quality test results are expected by the end of October. In February, Aviva announced it had doubled its initial 600Mt target at Mmamantswe, where it is investigating the merit of a 1,500MW power station.

"The large diameter holes will provide samples for drop shatter - wet tumble tests. This will allow the evaluation of different preparation techniques for the production of coal products ranging from low sulphur washed coal for export, to a de-shaled coal for a mine mouth power station. Rock and Stock have again been retained to manage the drill programme, and will provide geological and logistic management. Aviva is pleased to have initiated the employment of two graduate geologists from Botswana who will be working as field geologists on this programme, under guidance of the Rock and Stock project geologist," the statement says.

It adds that a coal quality and washability analysis will again be completed at the Witlab facility in Witbank, South Africa. Aviva expects to appoint coal preparation and mining consultants in the near future, providing the necessary economic parameters to allow the Mmamantswe resource to be upgraded to proven and probable reserves. Aviva listed on the Venture capital board late last year under the foreign companies to become the seventh resource firm on the board, alongside the likes of Diamonex, Discovery, A-Cap, African Diamonds and CIC- Energy. In June 2007, Aviva Corporation Limited signed a Heads of Agreement with Mawana Minerals (Pty) Ltd (Mawana) of Botswana to enter into a joint venture over the Mmamantswe Coal Project.

The agreement stipulated that Aviva will spend $500m over 18 months after which Mawana will grant it an exclusive right to earn a 90 percent joint venture interest in the project by undertaking a Bankable Feasibility Study.

The joint venture will be fully funded by Aviva but Mawana will still earn interest on its 10 percent stake. Mawana will have the right to take up a further 15 percent fully funded by Aviva.