Ferreira mine extension approved

Independent Newspapers

Continental Coal Limited‚ the South African thermal coal production‚ development and exploration company‚ announced on Thursday that it has received Section 102 approval from the South African Department of Minerals and Resources for the planned extensions to the Ferreira Coal Mine.

The approval allows the company to extend the current opencast mining operations into adjacent Prospecting Rights‚ comprising Portions 25‚ 27 and 100 of the farm Witbank 262 IT‚ acquired in April and May 2012.

Under the terms of previously executed Sale and Purchase agreements with Morningtide Investments 367 (Pty) Limited and Misty Sea Trading (Pty) Limited‚ the Company secured the right to develop the Prospecting Rights. The Prospecting Rights were acquired for a monthly royalty payment on each tonne of run-of-mine coal mined.

The Section 102 approval extends over the Prospecting Rights that are both located immediately adjacent to and adjoining the current open cast mining activities being conducted by the company at the Ferreira Coal Mine.

The company has completed all necessary mine planning work on the Prospecting Rights and incorporated it into the Ferreira Coal Mine’s new‚ and extended‚ mine plan. With the receipt of the Section 102 approval opencast mining activities now received‚ the company’s opencast mining contractors can now commence mining activities in this area.

Mining of an additional 650‚000 to 750‚000 ROM production tonnes is forecast from the new Prospecting Rights over the next 15 to 18 months. The ROM production will be washed through the Company’s existing Delta Processing Operations.

Sales of 420‚000 tonnes of a high quality thermal coal are forecast from the extended Ferreira Coal Mine for FY2013. The thermal coal will be transported by rail through to the Richards Bay Coal Terminal and sold under existing off-take agreements.

Commenting on the receipt of the Section 102 approval from the Department of Minerals and Resources‚ Continental Coal Limited Chief Executive Officer‚ Don Turvey‚ said: “The Section 102 approval from the Department of Mineral Resources‚ that extends over the Prospecting Right’s acquired earlier in the year‚ not only allows us to materially extend our mining operations at the Ferreira Coal Mine‚ but also means that there will be now an overlap of coal supply as Penumbra underground is starting up. With almost twice the current ROM feed into the wash plant‚ the Delta Processing Operations will be producing almost double the current monthly export thermal coal sales in 2H FY 2013 once the Penumbra Coal Mine ramps up towards full production.” - I-Net Bridge