As foreshadowed here, South African coal venture Strategic Natural Resources has joined AIM with ambitious expansion plans.

Chaired by Richard Lattham, the boss of Italy-focused Northern Petroleum, and run by chief executive officer Jeremy Metcalfe, the ex-head of fallen star Minmet, Strategic has raised £3 million at 30p through broker Hichens Harrison to explore and develop a 9,300 hectare coal project in South Africa’s Eastern Cape.

Metcalfe believes the company can increase the present estimates of a potential 15 million-tonne resource at the Elirtheni mine at Indwe, where it has an agreement to supply a 500-megawatt power station if it can guarantee certain supply targets, to at least 40 million tonnes.

And that is only one part of the area that Strategic is prospecting. The company previously raised a pre-float £1 million at 20p and, says Metcalfe, stands to receive another £3 million when its local Black Empowerment partners increase their stake from ten per cent to 26 per cent at 30p a share.

He envisages costs of ZAR100 (£6.9) a tonne and suggests Strategic will be able to sell its output of anthracitic, low-sulphur coal at ZAR500 to a local smelter (400,000 tonnes a year) and at ZAR200 to local brickmakers and other users. The company will concede a discounted price to the power station.

Metcalfe says he expects strong domestic demand, too, as the Eastern Cape, Prime Minister Tabo Mbecki’s home province, now suffers from a worsening power shortage. Road and rail facilities are close by and there is access to a newly developed port.

With Rurelec boss Peter Earl on the board, Strategic’s commercial director is the locally well-connected Barry Nel. Metcalfe says the company, whose nominated adviser is HB Corporate, hopes eventually to increase the resource as much as 20-fold.

The shares have so far risen to 33.5p, valuing Strategic at £20 million. They have speculative potential.

Strategic Natural Resources	AIM	£12.68m	19.50p	0.00p
Click here for interactive charting
Other company articles:
Coal deal for Strategic Natural Resources			28/10/2008
Coal glow for Strategic			14/10/2008
Exploration Insights			03/03/2008
Reserves boost for Strategic			14/02/2008
Early cheer for Metcalfe			04/09/2007