continental coal shares climb 10.87%

Continental Coal shares climb 10.87% on back of US$65m coal hedged debt agreement

Thursday, February 09, 2012 by Angela Kean

Continental Coal (ASX: CCC) has attracted the investors today with shares up 10.87% to A$0.25 on the exchange of 22 million shares as of 4.14pm (AEDT).

It is hardly surprising though, given the company announced yesterday its South African subsidiary had secured a US$65 million coal hedged debt agreement with ABSA Capital and a subsidiary of Barclays Bank to fund the Penumbra Coal Mine development.

Continental has hedged about 664,550 tonnes of coal over the life of the term loan facility at an average price of ZAR1,057 (A$129.32) per tonne.

Importantly, the coal hedging represents only 12% of the JORC Reserves at the Penumbra Coal Mine and provides upside to any rise in thermal coal prices, as well as providing operating flexibility.

Continental is accelerating development of the Penumbra Coal Mine in South Africa.

The first decline development blasts have been successfully completed with the development of the twin declines continuing at a rate of about 2.2 metres of advance every second day in each decline.

The Penumbra Coal Mine, which is on schedule and on budget, is forecast to produce annual run of mine production of 750,000 tonnes.

Importantly for Continental, Penumbra is forecast to double export thermal coal sales and group earnings in 2012.

http://www.proactiveinvestors.com.au/companies/news/25110/continental-coal-shares-climb-1087-on-back-of-us65m-coal-hedged-debt-agreement-25110.html