coal expects first production

CoAL expects first production at Vele by next quarter

By: Loni Prinsloo

28th July 2010

Coal-mining and development company Coal of Africa Limited (CoAL) said on Wednesday that it expected first production at its Vele coking coal project in South Africa's Limpopo province by the next quarter, followed by the first sales shortly thereafter.

CoAL executive deputy chairperson Simon Farrell said that the company had completed the exploration work required for the project to complete the final exploration and confirmation drilling three months ahead of schedule, resulting in substantial cost savings.

The miner was now only awaiting the grant of an integrated water use licence for the project, which is located on a property near the Mapungubwe World Heritage site.

Farrell said that CoAL was liaising with the relevant authorities on an ongoing basis for approval of its water licence application which was first submitted to the Department of Water Affairs in November last year.

The licence is required before CoAL can undertake certain mining activities on the Vele project. "We remain confident that the required licence should be received in the near term, meanwhile, construction of the mining infrastructure can go ahead as well as preparation of the mining area, but ore mining cannot start without the water use licence," said Farrell.

During the development phase of the project about 850 job opportunities were created, mostly staffed by residents from the nearby towns of Musina and Alldays, and the company expected that the production phase would create an additional 460 jobs.

Meanwhile, CoAL said that despite railing problems during its last quarter ended June 30, 2010, owing to strike action at State-owned logistics group Transnet Freight Rail, it had serviced its coal sales contracts from stockpiles on site and at the Matola port in Maputo, Mozambique.

However, Farrell pointed out that only 102 581 t of coal from its Mooiplaats colliery could be railed during the quarter. Nevertheless, the colliery sold its first lower-grade middlings coal to State-owned power utility Eskom.

Further, a third underground section was introduced towards the end of the quarter at the company's Mooiplaats colliery.

Farrell said that the development of further sections at the colliery was progressing according to plan and that additional continuous miners were due to be delivered during the next quarter.

The ramp-up of Mooiplaats was expected to be completed before the end of the year, with five sections producing 190 000 t/m to 200 000 t/m of run-of-mine coal expected thereafter.

Meanwhile, the company's Woestalleen mines and colliery continued to produce coal in line with expectations, but was unable to rail any coal during the three-week transport strike in May.

During the three-month period, the Woestalleen mines including, the Zonnebloem mine, the Hartogshoop mine and the Klipbank mine, had sold 137 391 t of unprocessed coal as ROM coal and 498 596 t as high-grade thermal coal and a further 136 596 t to Eskom.

The company reported a cash balance at the end of June 30, 2010, of A$101-million.