| Mon 13 Jul 2009, 9:00 | | CZA - Coal of Africa Limited - Coal Projects Update |
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CZA
CZA
CZA - Coal of Africa Limited - Coal Projects Update
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`)
13 July 2009
COAL PROJECTS UPDATE
Coal of Africa Limited, the AIM/ASX/JSE listed coal mining and development
company operating in South Africa (ticker: CZA), provides the following update
on the Company`s Mooiplaats thermal coal project in the Mpumalanga Province,
("Mooiplaats Project"), Vele coking coal project, near Musina in the Limpopo
Province ("Vele Project") and the Makhado coking coal project, also in the
Limpopo Province ("Makhado Project").
MOOIPLAATS
Following the announcement on 9 June 2009, the Company confirms that a revised
mining layout for the project has been finalised following an extensive
reassessment of the mine plan and geological conditions at Mooiplaats.
Depending on the rate of development, export quality thermal coal is now
expected to be reached in November 2009 at the earliest, or the first quarter
of 2010 at the latest. Other than this, all other aspects of the original
mine planning and scheduling remain the same. Importantly, there has been no
material amendment to either the anticipated tonnage schedules or the
project`s Life of Mine. Forecast run of mine ("ROM") production for the next
5 years is a follows:
Calendar Year 2010 2011 2012 2013 2014
ROM Production 1.7m 2.7m 3.1m 3.4m 3.2m
Operations at the Mooiplaats Project are continuing well, with mid volatile
"lean" coal currently being produced at a rate of 30,000 ROM tonnes per month,
whilst establishing access into the export thermal coal resource. The Company
is encouraged by ongoing discussions with a number of interested parties
specifically looking for mid volatile lean coal. In the event one or more of
these discussions materialises into a formal off-take agreement, production of
the lean coal can quickly be ramped up to over 80,000 ROM tonnes per month.
As previously announced, the Company has already reached agreement on terms
and conditions for the off-take of the export quality thermal coal to be
produced at Mooiplaats.
Furthermore, discussions are proceeding with third parties requiring coal
processing facilities as well as rail and port access whilst build-up at
Mooiplaats continues.
VELE
The Company is to develop its Vele Project in two phases. Phase 1 will
initially comprise the establishment of a modular coal treatment plant, which
will have the ability to deliver approximately 1 million saleable tonnes
(yield dependant) of coking coal per annum, expected to be delivered to
ArcelorMittal for use at it steelworks in Vanderbijl Park. The capacity of
the modular coal treatment plant can be doubled should ArcelorMittal seek to
increase their off-take from Vele. The Letter of Intent signed with
ArcelorMittal in April 2008 ("Mittal LOI") provides for potential off-take
from the Company`s coking coal properties of 2.5 - 5 mtpa. Phase 2 will
deliver the planned full capacity of 5 million tonnes of coking coal per
annum.
The Company is ready to launch Phase 1 immediately upon the granting of a New
Order Mining Right ("NOMR"), currently under review by the South African
Department of Minerals and Energy ("DME"), and approval is expected by the end
of Q3 2009. A significant amount of preparation has already been completed for
Phase 1, and capital expenditure committed to the modular plant, which will
shorten the production lead time. Wet commissioning of the modular plant is
scheduled for August this year. The timing of the Phase 2 expansion to
deliver 5 million tonnes per annum of saleable coking coal will be dictated by
market conditions.
The total capital expenditure required to complete Phase 1 is estimated at
R350 million. To double the Phase 1 capacity is estimated to cost a further
R200m and an additional R2.65 billion is required for Phase 2 (5 mtpa). The
Mittal LOI provides for a free on rail ("FOR") delivery in return for a free
on board ("FOB") indexed price, delivering a significantly better margin that
what would otherwise be enjoyed through exporting the coal. Initial mining
will be by opencast methods, which is also contributing to lower initial
mining establishment costs.
CoAL once again confirms that the Company has sufficient cash resources
available to complete the development of the Mooiplaats Project, as well as
the establishment of Phase 1 of the Vele Project.
MAKHADO
CoAL is progressing with planning of its Makhado Project. Analysis of the
coal resource quality is continuing, post the completion of additional large
diameter bulk sample drilling in Q2 2009.
The full scale project plan is based on the production of 5 million tonnes of
coking coal per annum. A similar phased approach to that at Vele utilising a
modular coal processing plant may also be applied at Makhado, which will lower
initial capital requirements and enable CoAL to self-fund the build up into a
full capacity mine. Current indications are that a modular plant based first
phase, with a capacity of 1 million saleable tonnes (yield dependent) of
coking per annum, will require a capital investment in the order of R500
million, compared to R2.7 billion required for the full-scale mine
development. Market conditions will determine whether the development of
Makhado will be based on full scale production of 5mtpa or a similar phased
approach as taken at Vele.
CoAL has prepared the documentation for the Makhado Project mining right
application, which is planned for submission to the DME once Section 11
approval has been obtained for the Farm swap with Rio Tinto. This is expected
H2 2009 as previously communicated.
CoAL will report further details in its next quarterly report scheduled for
release by the end of July 2009.
AUTHORISED BY:
Simon Farrell
Managing Director
For more information contact:
Simon Farrell, Managing Director
CZA
+61 417 985 383 or +61 8 9322 6776
Peter Bacchus/ Alastair Cochran
Morgan Stanley
+44(0) 20 7425 8000
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.
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Date: 13/07/2009 09:00:01 Produced by the JSE SENS Department.
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