Coal miner Coal of Africa Limited (CoAL) has obtained the mining right for its Makhado hard coking coal and thermal coal project, in South Africa’s Limpopo province.

The company announced last week that the Department of Mineral Resources (DMR) had issued a new-order mining right for the flagship project, in addition to a Section 11 approval transferring the right from CoAL to its wholly owned subsidiary and the project’s developer, Baobab Mining & Exploration.

“The granting of the mining right is a significant milestone for CoAL, as it allows the company to proceed towards developing Makhado,” said CEO David Brown in an update to shareholders.

Discussions with potential customers to secure offtake agreements for the coal products were initiated following the granting of the right.

Further, it was expected that the new-order right would also unlock funding opportunities for the development of the Makhado project, the construction of which would kick off in the first half of 2016 and which was expected to be completed within 26 months.

After a four-month ramp-up phase, the emerging colliery would deliver 5.5-million tonnes a year of saleable product – 2.3-million tonnes a year of hard coking coal and 3.2-million tonnes a year of thermal coal – over a 16-year mine life.

Meanwhile, the Section 11 approval allowed the Makhado Colliery Community Development Trust, which represented seven local communities, to acquire a 20% stake in Baobab with Yoright Investments, which had been formed by black entrepreneur Mike Nkuna, who obtained a 6% stake in the project.

Both parties now had two years to raise funding to acquire their interests, with the final amount payable subject to due diligence negotiated with CoAL.

CoAL was still awaiting the approval of the integrated water-use licence from the Department of Water and Sanitation.