Coal miner Wescoal has, through its subsidiary Neosho Trading 86, entered into an agreement to supply State-owned Eskom with coal from its greenfield development project Moabsvelden, in Delmas, Mpumalanga, for ten years.

The signature on the coal supply agreement (CSA) marks the conclusion of 16 months of negotiations with Eskom.

Development work at Moabsvelden, which includes boxcut mining and associated mining infrastructure, will start in the third quarter of this year, with the first coal to Eskom expected in January 2020.

The project is expected to contribute about three-million tonnes a year of mined coal towards Wescoal’s production capacity.

Further, Wescoal has also finalised the refinancing of its existing credit facilities through a consortium of South African commercial banks.

The debt facilities are for a combined R1.1-billion, with a provision that also allows Wescoal access to an additional R500-million accordion facility.

"The improved capital structure will consolidate and optimise various debt instruments, thereby enhancing the group’s liquidity and overall balance sheet strength.

"This will further enable the group to pursue specific existing organic growth expansion projects such as Moabsvelden and, subject to lenders approval, to take advantage of further inorganic acquisition opportunities in the market," the coal miner said in a statement on Wednesday.

PRODUCTION
Meanwhile, Wescoal production for the quarter ended June 30 fell by 20% quarter-on-quarter and 31% year-on-year as a result of the Vanggatfontein production downtime. Vanggatfontein's production of 220 000 t for the quarter was negatively impacted on by unprotected industrial actions, resulting in nearly six weeks of production downtime.

All mining and production activities have resumed and, as part of the production ramp-up plan, the capacity and efficiency have been supplemented with the addition of new equipment. New Caterpillar equipment for two production teams, comprising two excavators and seven 777 trucks, was delivered and commissioned during May.

An additional two teams are scheduled for delivery during this quarter. It is envisaged that the operation will reach its current maximum sustainable production rate of 340 000 t during September.

Elandspruit had also been impacted by labour disruptions and by a lack of production from underground mining during the quarter.

The opencast contractor has, however, delivered new equipment to site and revised the shift roster to be able to deliver the maximum sustainable production rate of 240 000 t a month.

Meanwhile, the Khanyisa complex's production increased by 692% year-on-year. The increased volumes came from the Khanyisa Triangle section, which has been 100% owned by Wescoal since February.