| Mon 8 Jun 2009, 9:00 | | CZA - CoAL - Commissioning of Mooiplaats Coal Handling and Preparation Plant |
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CZA
CZA
CZA - CoAL - Commissioning of Mooiplaats Coal Handling and Preparation Plant
Coal of Africa Limited
(previously, "GVM Metals Limited")
(Incorporated and registered in Australia)
(Registration number ABN 008 905 388)
Share code on the JSE Limited: CZA
ISIN: AU000000CZA6
Share code on the Australian Stock Exchange Limited: CZA
ISIN: AU000000CZA6
(`CoAL` or `the Company`)
8 June 2009
COMMISSIONING OF MOOIPLAATS COAL HANDLING AND PREPARATION PLANT
* Coal Handling and Preparation Plant ("CHPP") successfully commissioned with
capacity to process 110,000 tonnes of run-of-mine coal per month
* Completion and commissioning of second CHPP module planned for Q4 2009
* Bituminous coal to be mined Q1 2010
* Mooiplaats project under the original CAPEX budget
* Cash on hand of US$82.7 million
Coal of Africa Limited ("CoAL" or "Company"), the AIM/ASX/JSE listed coal
development company operating in South Africa (ticker: CZA), is pleased to
announce that it has successfully commissioned the Coal Handling and Preparation
Plant ("CHPP") at its Mooiplaats Colliery in Mpumalanga, South Africa.
This first module of the CHPP has the capacity to process 110,000 tonnes of run-
of-mine (ROM) coal per month. When processing bituminous coal, it will produce
an export quality thermal coal, as well as a lower grade middling product
suitable for the domestic power station market. The mine is situated only 1.7 km
from Eskom`s Camden Power Station.
The Mooiplaats plant was designed, built and commissioned by Portaclone, with
site engineering, procurement and construction management (EPCM) handled by ELB,
who supervised several subcontractors. Technical project management was
undertaken by Badger Mining and Consulting. The contract for the operation of
the plant has been awarded to Kwena Processing, who took over operation of the
plant at the end of May 2009.
"The achieved project schedule of less than nine months is very pleasing,
particularly given delays caused by an abnormally wet rainy season", Simon
Farrell, CoAL`s Managing Director, said. "The project has also come in under the
original CAPEX budget. Most importantly, the site suffered only one Lost Time
Injury to date, due to a minor accident that did not result in any serious
injury, a commendable achievement given that there were more than 500 staff
represented by several contractors working together during this period."
Portaclone has already commenced manufacturing the second module, which will
double processing capacity. Completion and commissioning of the second module is
planned for Q4 of 2009. Both modules will have the ability to handle bituminous
or lean coal.
Production
As indicated in the Company`s quarterly report for the March Quarter, the
Company has experienced adverse geological conditions at Mooiplaats that were
not anticipated from initial interpretation of the extensive exploration
geological drilling conducted over the area. An extensive reassessment of the
mine plan has been conducted during the past 2 months, which has involved
underground horizontal drilling, surface geological drilling and wireline
logging to gain better understanding of factors which may impact the mining
layout.
Management is now considering a revised mining layout and tonnage schedule,
which it anticipates will result in bituminous coal only becoming available in
Q1, 2010. CoAL will in due course advise the market of revised tonnage
schedules after the planning process has been completed, which is expected to be
within the next 2 weeks. Importantly, with a cash balance of approximately
US$82.7m, the Company has sufficient funds to complete the development of
Mooiplaats and Phase 1 of Vele as previously advised.
Mr Farrell noted that "Underground mining continued during this period to
develop access through lean coal resources to bituminous coal. Again, the mining
contractor, BRSW (Klipbank Mining) and the supporting contractor, Izazi, did
excellent work to stabilize the access portals and develop through some very
challenging weak roof conditions, as well as 2 dyke intersections without
incurring any serious injuries."
Development through "lean" coal areas will now continue to Q1, 2010, which will
result in a delay in reaching the bituminous coal as mentioned above.
Commercial discussions with several international parties regarding the sale of
this mid-volatile product are ongoing. Further, discussions with a number of
parties who produce unwashed coal but require coal processing capacity have also
commenced. Commercial terms have not been completed, but will be based on a
profit sharing arrangement.
Siding
CoAL is pleased to confirm that it has reached an agreement, which is subject to
formal documentation, with the owner of a nearby siding to be used as a
temporary arrangement whilst the nearby Overvaal siding is being recommissioned,
which is expected to be completed during Q1, 2010.
Off-take
CoAL has reached in principle agreements with two international coal trading
companies for a minimum of 70% of the export thermal coal expected to be
produced from Mooiplaats. In both cases, formal agreements are expected to be
executed in the coming weeks. Importantly, the terms and conditions proposed by
the traders are extremely favourable and offer significant upside over and above
what is considered standard terms within the industry.
Other
Coal is also pleased to advise that design and construction of the Vele modular
plant is progressing on schedule and steel fabrication is 50% complete, with
major components out on tender. As previously announced, the application for
the New Order Mining Right at Vele and associated Environmental Impact
Assessments is now complete and we await a formal decision from the Department
of Minerals & Energy, expected in Q3 2009.
Yours sincerely
SIMON J FARRELL
Managing Director
For more information contact:
Simon Farrell, Managing Director
CZA
+61 417 985 383 or +618 9322 6776
Simon Edwards/ Chris Sim
Evolution Securities
+44(0) 20 7071 4300
Jos Simson/ Leesa Peters
Conduit PR
+44(0) 20 7429 6603
About CoAL:
Coal of Africa Limited ("CoAL") is primarily focused on the acquisition,
exploration and development of thermal and metallurgical coal projects. The
Company`s key projects, along with its leading metals processing company NiMag
Group (Pty) Ltd are in South Africa. The Company was incorporated in Western
Australia and listed in 1980. Since 2005, the Company has also listed on both
the AIM and JSE markets, allowing further growth in the Company`s coal assets.
www.coalofafrica.com
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Date: 08/06/2009 09:00:01 Produced by the JSE SENS Department.
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