TIDMCZA
RNS Number : 3434L
Coal of Africa Limited
29 July 2011
ANNOUNCEMENT 29 JULY 2011
REPORT FOR THE QUARTER ENDED 30 JUNE 2011
Coal of Africa Limited ("CoAL" or "the Company") provides its
operational report for the quarter ended 30 June 2011. A copy of
this report is available on the Company's website,
www.coalofafrica.com.
Highlights
-- Washing of the Makhado coking coal project ("Makhado
Project") bulk sample completed at Exxaro Resources Limited's
("Exxaro") Tshikondeni Colliery.
-- 1,256,825 tonnes (Q3: 1,229,584 tonnes) of run of mine
("ROM") and 664,865 tonnes (Q3: 717,367 tonnes) of export quality
coal produced at the Woestalleen and Mooiplaats thermal
collieries.
-- Sales of Export coal increased to 492,781 tonnes in the June
2011 quarter from 198,347 tonnes in the March 2011 quarter, due to
increased operational performance on the Maputo Rail Corridor and
additional throughput capacity at the Matola Terminal in Maputo,
Mozambique.
-- Transitioning the Group's Mooiplaats thermal coal colliery
("Mooiplaats Colliery") from a contract mining operation to an
owner-managed operation.
-- Appointment of Mr Wayne Koonin as Financial Director.
-- Total cash balance and available facilities at the end of the
quarter of A$34.88 million.
Post quarter highlights
In early July 2011, the South African Department of
Environmental Affairs ("DEA") granted authorisation for
rectification at the Vele Colliery in terms of Section 24G of the
National Environmental Management Act (Act No. 107 of 1998) as
amended ("NEMA"). The authorisation contains specific conditions
which the Company will be required to fulfil due to the uniqueness
of the area. Completion of the construction and commissioning phase
of the plant and mine is expected to take place within six to nine
months from the restart in August 2011 and is ultimately intended
to ramp up to an initial production profile of 1 million tonnes per
annum.
Commenting today, Mr John Wallington, Chief Executive Officer of
CoAL said: "The increased throughput at the Matola Terminal
combined with mining and rail improvements, resulted in a
significant increase in export coal sales during the quarter."
"At the Mooiplaats Colliery, we have taken an important step in
the development cycle of the mine by transitioning from an
outsource contractor to an owner operated mine. As a result of this
change, approximately 300 employees previously employed by the
contractor are now employed directly by Mooiplaats. The handover
process has gone extremely well and we are confident that the
expected operational and cost efficiencies will be realized."
"During the quarter, significant progress was made on issues
relating to the Vele Colliery. Importantly, following several
months of intensive interaction and work with the various
government departments, the Integrated Water Use Licence ("IWUL")
was granted on 4 April 2011 and the Environmental Authorisation on
5 July 2011. However, as anticipated and with reference to the
announcement released earlier today, on 28 July 2011, the NGO
coalition has filed an appeal with the Minister of Environmental
and Water Affairs against the granting of the IWUL. The Company has
the right to file an appeal with the Minister to apply discretion
in the matter to allow mining to continue and for the appeal to be
heard in the normal course of events. We are in the process of
assessing the appeal by the action groups and preparing the
necessary submission to the Minister on an urgent basis."
"CoAL is committed to continue working closely with the various
government departments, ensuring compliance with legislation as
well as specific requirements stipulated by government in granting
authorisation to recommence operations. Further announcements in
this regard will be made in due course."
QUARTERLY COMMENTARY
Woestalleen Colliery - Witbank Coalfield (100%)
The outstanding safety record at the Zonnebloem colliery was
sustained during the quarter with the site not recording a single
lost time injury since its start-up in 2008. One lost time injury
was recorded at the Woestalleen mines and processing plant
("Woestalleen Colliery") during the quarter and Management's focus
on safety remains a priority.
Production of ROM coal at Woestalleen's open cast mines
increased by 7% compared to the previous quarter, yielding 970,220
tonnes (Q3: 909,994 tonnes) of coal. Quarter on quarter production
at the Zonnebloem colliery was up 30% with 955,872 ROM tonnes mined
(Q3: 735,674 ROM tonnes). The Hartogshoop North colliery was mined
out in the quarter yielding 14,348 ROM tonnes (Q3: 161,027 ROM
tonnes) and the Klipbank colliery, mined out in the previous
quarter yielded zero ROM tonnes (Q3: 13,293 ROM tonnes).
The Woestalleen wash plant produced 503,625 saleable tonnes (Q3:
505,894 saleable tonnes) of export quality coal. The plant produced
a further 73,265 saleable tonnes (Q3: 88,081 saleable tonnes) of
lower grade product for Eskom, the South African electricity
utility.
An overall yield of 64.5% (Q3 : 64.2%) was marginally lower than
the previous quarter.
Mooiplaats Colliery - Ermelo Coalfield (100%)
Safety continues to be a focus at the Mooiplaats Colliery, where
four lost time injuries were reported at the mine during the June
2011 quarter.
Coal production for the three months decreased by 10.3%, from
319,590 ROM tonnes in the previous quarter, to 286,605 ROM tonnes
in the June quarter. The decrease was primarily due to the transfer
of mining operations from a contractor miner to CoAL as the
operator. The transition to an owner managed mine will enable
direct management of the operation and improve the overall
performance of the mine. As part of this process, employees
previously employed by the contractor, were transferred to the
direct employ of the mine. All mining equipment was previously
purchased and remains the property of the mine, thereby minimising
disruptions during the transitional phase. Steps are underway to
open the fifth underground section during the last quarter of this
year, with all the necessary capital expenditure having already
been incurred.
Coal processed during the three months declined from 413,111 ROM
tonnes in the March quarter, including 121,426 purchased ROM
tonnes, to 321,105 ROM tonnes in the June quarter, including 31,274
purchased ROM tonnes. A total of 161,240 tonnes (Q3 : 211,473
tonnes) of export quality coal was produced and 44,348 tonnes (Q3:
66,907 tonnes) of the lower grade product for Eskom.
The overall yield of 64.0% (Q3: 67.4%) was lower quarter on
quarter due to the high level of contamination mined by the
contractor.
Subsequent to quarter end, following the switch from contract
mining, the decline in production has been reversed along with an
improvement in the contamination levels. Management continue to
monitor the situation closely to ensure that the improvement in
operational performance continues.
Marketing and Logistics
Additional rail capacity created by Transnet Freight Rail
earlier in the year supported the significant increase of export
sales through the Matola Terminal. The purchase of 42,774 tonnes of
third party coal and the completion of the port expansion
contributed in the increase of export sales by 148% from 198,347
tonnes in the March 2011 quarter to 492,781 tonnes in the June 2011
quarter.
In the June 2011 quarter, Woestalleen sold 264,813 tonnes (Q3:
356,986 tonnes) and Mooiplaats Colliery sold 63,233 tonnes (Q3:
61,155 tonnes) to domestic customers and Woestalleen Colliery sold
39,460 tonnes (Q3: 66,543) and Mooiplaats Colliery sold 69,242
tonnes (Q3: 52,649 tonnes) of lower grade coal to Eskom.
Summary tables (tonnes)
Woestalleen Mooiplaats Total
June 2011 quarter
------------ ----------- ----------
ROM production 970,220 286,605 1,256,825
------------ ----------- ----------
ROM coal purchased - 31,274 31,274
------------ ----------- ----------
Total coal processed 894,605 321,105 1,215,710
------------ ----------- ----------
Overall Yield 64.5% 64.0% 64.4%
------------ ----------- ----------
Total coal produced 576,890 205,588 782,478
------------ ----------- ----------
Export coal 503,625 161,240 664,865
Middlings coal 73,265 44,348 117,613
------------ ----------- ----------
Saleable coal purchased - 40,298 40,298
------------ ----------- ----------
Total coal sales 304,273 625,256 929,529
------------ ----------- ----------
Export - 492,781 492,781
Inland 264,813 63,233 328,046
Eskom 39,460 69,242 108,702
------------------------- ------------ ----------- ----------
Vele Coking Coal Project
As announced previously, the development phase of the Vele
Colliery is near completion. No activity was undertaken at the
colliery during the quarter as a result of the Compliance Notice
served on the Company by the DEA in August 2010.
CoAL applied for an Integrated Water Use Licence ("IWUL") in
November 2009 and had been liaising with the Department of Water
Affairs ("DWA") to progress the application. During the quarter the
DWA granted the IWUL, completing a significant outstanding
requirement for commencement of operations at the colliery.
The rectification papers previously submitted in terms of
Section 24G of NEMA resulted in the Company being required to pay a
ZAR9.25 million (A$1.26 million) administrative fine to the DEA.
The payment of the fine was a pre-condition to enable the DEA to
adjudicate the application for rectification relating to the
environmental authorisation for the Vele Colliery.
This authorisation was granted on 5 July 2011, and contractors
are being mobilised to recommence with the completion of the
construction of mining and coal processing infrastructure at the
mine site. As previously announced, the Company expects to bring
Vele into production within six to nine months of the restart date.
The construction activities, commissioning of the plant and
recommencing production are being planned and implemented. At the
time operations were halted in August 2010, work was 95%
complete.
Due to the temperate climate and that no wet commissioning of
the plant had taken place, there has been limited degradation to
the plant and infrastructure whilst the mine was dormant. Upon
recommencing activities, a full assessment will take place and the
necessary steps implemented to address any issues that require
remediation. The natural ingress of water into the pit over the
past year requires dewatering prior to the recommencement of mining
activities.
On 28 July 2011, the Integrated Water Use Licence ("IWUL") for
the Vele Colliery has been suspended in terms of Section 148(2) (b)
of the South Africa National Water Act, No, 36 of 1998, due to an
appeal to the Water Tribunal submitted by an NGO coalition. The
appeal automatically suspends the licence unless the Minister of
Water Affairs directs otherwise. In the interim, the Company is
therefore unable to continue with activities at the Vele Colliery
that require water use, however in anticipation of recommencing
operations, the planning in relation to other construction and
mining activities that do not require the use of water are
ongoing.
CoAL has the right to and is in the process of preparing an
urgent appeal to the Minister requesting that the IWUL remains in
full force and effect in this interim period and until the final
conclusion of the appeal. If the Company is successful in its
representation to the Minister the Company will be able to continue
all activities, including the water uses per the IWUL.
Makhado Coking Coal Project
During the quarter, independent experts continued with the
baseline social and environmental studies required for the Makhado
Project New Order Mining Right ("NOMR") application that was lodged
with the DMR in January 2011. Consultation processes with
interested and affected parties continued during the period. These
will form part of the extensive economic, social and environmental
impact studies required for the NOMR. The studies will result in
the formulation of a detailed Environmental Management Programme
for the Makhado Project.
The processing of the Makhado Project bulk sample at Exxaro's
Tshikondeni Colliery was completed during the quarter. Samples of
the washed product have been sent to ArcelorMittal South Africa's
("AMSA") Vanderbijlpark facility for testing.
The results of the tests are expected to facilitate the
finalisation of the terms and conditions related to volumes and
pricing for the proposed off-take agreement between CoAL and AMSA,
as well as the finalisation of the Makhado Project Definitive
Feasibility Study. Additional coking coal samples are being
analysed at the Company's Polokwane laboratory and further trial
samples are being sent to potential export customers.
The Definitive Feasibility Study is at an advanced stage and is
expected to be tabled for consideration by the Board before
calendar year end. Construction is anticipated to commence in mid
2012.
Corporate Activity
Financial Director Appointment
During the quarter, CoAL announced the appointment of Mr Wayne
Koonin as Financial Director. Mr Koonin has extensive international
experience working in the financial role at Board level in
exploration, development and operating mining companies, including
coal. Mr Koonin has most recently been the Chief Financial Officer
of Platmin Limited, a platinum mining company listed on the Toronto
Stock Exchange, AIM and the JSE.
Cash and Available Facilities
At 30 June 2011, total cash on hand and call deposits was
A$34.88 million (31 March 2011 : A$25.113 million) and undrawn loan
facilities and standby credit arrangements was A$26.41 million (31
March 2011 : A$36.913 million). Quarter on quarter, total cash and
available facilities remained in line with management
expectations.
Authorised by
JOHN WALLINGTON
Chief Executive Officer
29 July 2011
For more information contact
John Wallington Chief Executive Officer Coal of Africa +27 11
575 7423
Wayne Koonin Financial Director Coal of Africa +27 11 575
6797
Ryan Rockwood Associate Director Azure Capital +61 447 760
058
Chris Sim/Romil Patel Nominated Adviser Evolution Securities +44
20 7071 4300
Jos Simson/Emily Fenton Financial PR Tavistock +44 207 920
3150
www.coalofafrica.com
About CoAL:
CoAL is an AIM/ASX/JSE listed coal mining and development
company operating in South Africa. CoAL's key projects include the
Vele Colliery (coking coal), the Makhado Project (coking coal) and
the Mooiplaats and Woestalleen Collieries (both thermal coal) .
The Mooiplaats Colliery commenced production in 2008 and is
currently ramping up to produce 2 million tonnes per annum
("Mtpa"). CoAL's Vele Colliery and Makhado Project are expected to
start production in the first half of 2012 and the first half of
2013 respectively. These operations are targeted to collectively
produce an initial 1Mtpa ramping up to a combined annual output of
10Mtpa of coking coal.
In 2010, CoAL completed the ZAR467m acquisition of NuCoal Mining
(Pty) Limited ("NuCoal"), a thermal coal producer with assets in
South Africa in close proximity to CoAL's Mooiplaats Colliery.
NuCoal owns the Woestalleen Colliery, which has a number of
off-take contracts in place and processes approximately 2.5Mtpa of
saleable coal for domestic and export markets. The Woestalleen
Colliery also incorporates two beneficiation plants with a total
processing capacity of 350,000 run of mine feed tonnes per
month.
In November 2010, CoAL agreed to acquire the Chapudi coal
project and several other coal exploration properties in the
Soutpansberg coal basin in South Africa from the previous owners,
including Rio Tinto. When completed, the acquisition of these
projects will significantly extend the scale and scope of certain
of CoAL's existing projects in the region and will more than double
the resource of the existing Makhado Project.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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