Name and Location
Penumbra coal project, Mpumalanga, South Africa.

Client
Continental Coal.

Project Description
The Penumbra coal project has estimated gross saleable reserves of 5.4-million tons and gross on-site coal resources of about 68.3-million tons, which are contained within the C-lower coal seam, at an average seam height of 1.8 m and at a depth of between 50 m and 115 m.

It is located in the Ermelo coalfield, 3 km from the Ferreira opencast mine and 2 km from the Anthra railway siding on the coal line to Richards Bay, in Durban, KwaZulu-Natal.

The project will be developed as a conventional underground bord-and-pillar mining operation. Access to the coal seam will be established through a portal and the sinking of twin declines at 8° to the coal seam. The declines will be about 200 m long – one will be equipped with a conveyor and the other will serve as a men-and-materials access route. They will serve as the primary ventilation intakes of the colliery, each with airflow velocities within industry norms.

Two mechanised coal-production sections are envisaged, each with a continuous miner. One section will be equipped with three shuttle cars, which are better suited to midseam mining heights, and the other with battery haulers, which are better suited to low-seam mining heights.

The mine is forecast to produce yearly run-of-mine production of 750 000 t. The coal produced will be beneficiated through the existing Delta processing operation, which comprises a 1.8-million-ton-a-year coal processing plant and the 1.2-million-ton-a-year Anthra rail sliding.

Planned production for the is about 500 000 t/y of primary export thermal coal and 120 000 t/y of secondary domestic-quality thermal coal. The overall yield is 81%.

The export product will be railed from the existing rail siding to the Richards Bay Coal Terminal (RBCT), under existing rail contracts, and the product will be sold under existing offtake agreements.

Value
The forecast cost to complete the project is $40-million.

Duration
Development started in September 2011, with the excavation of the box-cut to a depth of 18 m, followed by the development of the twin declines. The first blast in the decline was completed in early February 2012.

Full production is scheduled for June 30, 2013.

Latest Developments
Production at Penumbra continues to accelerate, with Contnental Coal reporting a 93% month-on-month increase in output to 27 311 t in February.

The higher production followed the commissioning of the second continuous underground miner at Penumbra in February and the development of additional coal panels in the bord-and-pillar underground operations.

Underground production of between 35 000 t and 40 000 t is forecast for March 2013, with both continuous miners in full operation. Run-of-mine (RoM) production of between 75 000 t and 80 000 t is forecast for the third quarter of 2013, with monthly budgeted RoM production of about 63 000 t scheduled to be achieved by June 2013.

RoM coal from the mine continues to be processed through Continental’s Delta processing operations located 3 km away and railed through to RBCT from the adjacent Anthra rail siding. Primary export yields of 47.2% were achieved in February 2013, an increase on the 37.2% primary export yield achieved in January 2013. Primary export yields of about 67% are forecast to be achieved once Penumbra has achieved steady-state operating levels by June 2013.

Export thermal coal sales from the mine of 9 131 t in February 2013 represents a 75% increase on the 5 212 t of export thermal coal sales in January 2013.

The company remains focused on completing the outstanding mine development and construction work. With more than 90% of development activities completed, the remaining work is largely associated with construction of the main ventilation shaft, where precementation work has started this month.

All mine construction activities are scheduled to be completed by April 2013 and are funded from the drawings under the ABSA Capital Debt Facilities.

Key Contracts and Suppliers
Murray & Roberts (twin declines), Leomat (civils contract), Joy Mining Machinery (underground mining equipment) and ABSA Capital (loan facility).

On Budget and on Time?
The project is currently within budget; however, Continental is slightly overlapping the timeframe, owing to a few challenges during the development phase and further restrictions that were placed on the company when it received its integrated water use licence.

Continental had to move the position of the shaft, which cost money and set it back a few weeks, but it managed to change the mine design and carry on with construction as soon as it could.

Contact Details for Project Information
Continental Coal CEO Don Turvey, tel +27 11 881 1420 or fax +27 11 881 1423.
ABSA Capital marketing and communications associate principal Graeme Coetzee, tel +27 11 895 6695, cell +27 79 695 9798 or email graeme.coetzee@absacapital.com.
M&R corporate communications executive Ed Jardim, tel +27 11 456 6200, fax +27 11 455 1322 or email eduard.jardim@murrob.com.
Leomat, tel +27 35 797 4611, fax +27 35 797 3344 or email info@leomat.net or construction@leomat.net.
Joy Mining Machinery (South Africa), tel +27 11 634 2226, fax +27 11 634 8923 or email southafricasales@joy.com.