Name and Location
Vele colliery expansion project, Limpopo, South Africa.

Client
Coal of Africa Limited (CoAL).

Project Description
As at September 28, 2012, Vele had Joint Ore Reserves Committee-compliant resources of:
• 795.7-million gross tonnnes in situ and 672.9-million mineable tonnes in situ of shallow-dip coal;
• 362.5-million tonnes, including 42.4-million tonnes of proven reserves and 325.6-million tonnes of probable reserves; and
• 42.4-million tonnes of run-of-mine (RoM) from the central and northern pits over a 16-year period, producing 16.5-million tonnes of saleable product.

The mine is currently configured as an opencast mine, but owing to the significant resource underground mining is a potential in the future.

The first phase of the project entailed the establishment of a modular coal treatment plant.

CoAL is embarking on the modification and expansion of its Vele colliery beneficiation plant, which will enable it to optimally produce three coal products (semisoft coking coal, thermal coal and sized coal) simultaneously at an expected processing capacity of 2.7-million tonnes a year of RoM. The planned three-month front-end engineering and design (Feed) process will enable CoAL to arrive at a class 1 – engineering, procurement and construction estimate.

The scope of work for the Feed contract includes:
• identifying and improving sections of the existing plant to ensure a 500 t/h throughput capacity;
• a stockpile management philosophy and associated design;
• a RoM handling, crushing and screening section;
• a destoning wash plant;
• a sized coal screening plant;
• a classifier in the fines beneficiation circuit;
• a froth flotation plant for the beneficiation of the ultrafines; and
• products and discard stockpiling and load-out facilities.

Value
The total capital expenditure to complete plant modification is estimated at R450-million and includes the necessary mine development and production ramp-up.

Duration
The expansion project will take place in the 2014 calendar year and expanded production will begin in 2015.

Latest Developments
CoAL’s board has approved a R220-million plant expansion capital at Vele colliery. This is in line with the company’s publicly announced strategy to reposition itself as a project development company focusing on its coking coal assets. This figure is included in the total amount of R450-million.

The approval follows the re-evaluation and confirmation of the quality of coal at Vele, and the conclusion of a review of the current operations. As part of that process and for the colliery to reduce the current cash losses incurred, the colliery ceased production during October 2013 to prepare for the construction phase of the announced expansion.

The company has started the required fundraising activities, which should be finalised by the end of March 2014.

Completion of the expansion is expected by the end of 2014. Thereafter, the colliery will begin to ramp up operations during 2015 and will be at full production by the end of that year.

A collaborative and inclusive engagement process with the contractor companies operating at the mine has been concluded, with 49 people retained, 138 employees redeployed to other operations and 155 employees retrenched. Throughout this process, the company has attempted to minimise job losses, while proactively engaging with all its stakeholders to minimise these impacts. This has resulted in the preservation of 55% of the jobs.

CoAL’s commitment to recruit from its local labour-sending areas will be upheld once the construction phase starts in 2014.

Key Contracts and Suppliers
Sedgman South Africa (Feed)

On Budget and on Time?
Not started.

Contact Details for Project Information
CoAL head of engineering, Nico Pretorius, email nico.pretorius@coalofafrica.com; or investor relations and business development manager Celeste Harris, email celeste.harris@coalofafrica.com