brief overview of the competent persons report

First of all. Good news today. There is no better sign of success, than progress. It is a motto I like to carry. To reach the milestone, you have to tick the boxes along the way, and they have certainly done so by FINALLY getting the contractors into motion. With the box cut to take place in two weeks time, we are on our way to mining from Penumbra.

Now, onto the reason for this post. The CPR.

http://www.conticoal.com/fileadmin/content/Aim_listing_docs/CCL_CPR_15_Aug_2011_final.pdf

It's a lengthy document, over 200 pages in size, but there is some stuff in there that we have not seen before. If you have time over the weekend, perhaps skim over the entire report, but I'll summarise some important pieces from the executive summary. When I get a chance, I'll look over the report in detail and update this post if I see fit.

First up, the in situ coal quality of our South African assets. It's fairly good. DW CV is a bit lower than what I would have liked (see comment about yields below), but on the other hand Penumbra is slightly higher than I thought it was. The sulphur content in the Ferreira coal is very much above the norm, but it looks like the operators of the mine have been able to keep things under check with no issues reported to date from what I know. One thing to note is that the VV coal actually isn't that bad so its surprising that Conti don't try and get a bit of export grade coal out of it. Perhaps the fact that the mine is 100km away from their 'HUB' makes it uneconomic to do so. I might pose this question with JB if I get a chance.

Now we move on to a summary of the washed quality of our South African assets. The DW yields are naturally going to be a fair bit lower than Penumbra because the coal quality is worse, but the rest looks about right to me. I believe the VV coal is sold as above, hence they do not have washed figures.

Then the executive summary goes through the details of the operation of F and VV. FYI - the rehab costs for Ferreira are only about $1M when the time comes to call it a day there.

Moving on, we get some hints about what will be in the DW BFS to be released shortly; especially with the process modelling. There is further information on this in the body of the report under section 6-18. This map in 6-5 of the coal from in DW may interest some because it reflects the ratio of Surface to UG mining that will take place there.

In the report itself, sections 6-6 to 6-8 go on to illustrate the coal reserves/resources in each of the three economic seams at DW. Seam A which is only 60cm in thickness will be mined from the surface, before the operators move on to the B and C seams which are both 2m+ wide.

I could sit here all day and bore you all with a run down of the entire report, but its probably better off that you go through it yourselves and read the sections that take your interest. I haven't even begun to look over the Penumbra section yet which I'm sure will make for interesting reading when I get the time.

For now, happy reading :)