JOHANNESBURG (miningweekly.com) – ASX-, Aim- and JSE-listed Coal Of Africa (CoAL) has submitted an application to amend the current new order mining right at its Mooiplaats mine, in South Africa’s Mpumalanga province, to include the Klipbank and Adrianople farms.

The company said in its financial results for the year ended June that it had also lodged the supporting environmental management plan to include these farms.

“This will allow the development of the south decline, in order to increase the life of the mine,” the company said in a statement.

CoAL has also entered into negotiations with the parties holding the rights to areas contiguous to the Mooiplaats north area, which would lead to the extension of mining life in that area.

“Mooiplaats is well on its way to building up production to 1,7-million run of mine (ROM) tons in 2010, and about three-million tons a year in 2011.”

Following the successful dewatering, desilting and deepening of the box-cut to the floor of coal at Mooiplaats, the first continuous miner began cutting coal in November 2008. The inclined conveyor infrastructure was completed while mining portals were being established, thereby enabling mining development to continue while the coal handling and preparation plant (CHPP) was being constructed.

The second module of the plant was currently under construction, with commissioning expected by November. This would increase ROM capacity from 110 000 t to 220 000 t a month.

CoAL noted that by the end of June, about 3 400 m had been cut, yielding close to 50 000 t of coal. The current lean coal-mining rate averages 30 000 t/m, which can be increased to 80 000 t/m if required by the market.

At the Vele coking coal project, in Limpopo, significant progress was made during the year, and the company was expecting the new order mining right to be granted by the Mineral Resources department soon.

CoAL plans to implement the project in two phases, with the first phase comprising the establishment of a modular coal treatment plant with capacity to deliver about one-million saleable tons of blend coking coal a year, with ROM coal planned to be sourced from opencast mining.

Because of the modular nature of this plant, capacity may be doubled dependant on market conditions.

Phase two would require the construction of the full-scale coal treatment plant to deliver five-million tons of blend coking coal a year, at which point the underground operation would be established.

RESULTS

CoAL recorded a net loss of $14,5-million in the 2009 financial year ended June 30, compared with the net loss of $11,2-million recorded in 2008.

It posted a headline loss of 2,76c a share, compared with the loss of 4,12c previously recorded.

The company’s base-metal subsidiary, NiMag reported a loss of $2,6-million for the year, primarily owing to a $1,7-million loss as a result of the revaluation of nickel inventory.

EMPOWERMENT

Meanwhile, CoAL has reached a broad based black economic-empowerment (BBBEE) agreement.

CoAL has agreed to issue a total of 50-million options exercisable at 60p each, expiring five years from the date of issue, to Firefly.

Firefly, which is wholly owned and controlled by historically disadvantaged South Africans, would lead the BBBEE consortium, and its current shareholders include Mosomo Investment Holdings, and Mtungwa Resources.

Firefly has undertaken to, within a period of three months, distribute the options to the King of the VhaVenda from the Limpopo province, His Majesty Khosi Khulu Toni Mphephu Ramabulana, representing his constituents of the Mudimeli, Musekwa, Makushu-Musholombi and Tshivhula communities, relevant female empowerment and youth groups, as well as a special purpose vehicle to promote and develop entrepreneurs and other specific community groups in the Limpopo province.                                                              

“This is the culmination of a great deal of effort and consultation to ensure broad based community participation in the future success of CoAL. This historic agreement paves the way for CoAL’s long-term future in South Africa and our development projects. We are delighted that CoAL not only has community participation, but also community support for our development plans," said CoAL MD Simon Farrell.    

In addition, the issue of the options will be subject to certain regulatory approvals, such as the Australian Foreign Investment Review Board.

The "in the money" options would represent about 10,85% of CoAL’s issued capital upon being converted into ordinary shares.                                                

Firefly will also have the right to nominate two persons to the CoAL board.

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