CoAL wants new-order mining right extended

COAL of Africa (CoAL) said yesterday that it would submit an application to the Department of Mineral Resources to extend the new-order mining right for Uitkomst Colliery in KwaZuluNatal in a bid to align it with the colliery’s remaining lifespan of 17 years.

This comes as the emerging coal exploration, development and mining company released its “Summary of technical review 2017”, which details Uitkomst’s resources and reserves at February 28, 2017. The new-order mining right covers 11 137 hectares, expiring in October 2023.

Uitkomst is a high-grade thermal coal deposit with metallurgical applications. It sells export-quality coal sized 0mm to 40mm, as well as peas sized 10mm to 25mm.

CoAL acquired 91 percent of the shares and claims in Uitkomst for R275 million from Pan African Resources on June 30, 2017. The remaining 9 percent is held by broadbased trusts, including employees and communities. The colliery comprises a South Adit horizontal shaft using traditional bord-and-pillar mining methods, as well as a planned life-ofmine extension to the north on the adjacent Klipspruit Mining Area, or the North Adit.

The colliery has environmental and social permits, as well as a valid Integrated Water Use Licence (Iwul) and has applied for an amendment of its Iwul to include the North Adit.

CoAL said Uitkomst has secured long-term access to the surface rights required for the colliery and will utilise the South Adit surface infrastructure and processing plant for the washing of run of mine (RoM) coal from the North Adit. The South Adit generates an average of 45 000 tons of RoM coal a month from two underground sections, supplying the owner-operated processing plant. This coal yields about 30 000 tons of saleable coal.

Uitkomst also purchases RoM coal from collieries in the surrounding area to make use of surplus processing capacity. A total of 369 895 tons of RoM coal was mined at Uitkomst between March 1, 2017, and August 31, 2017. The company also benefited from R60m in positive working capital as at acquisition date resulting in positive cash flows.

CoAL’s chief executive, David Brown, said the addition of Uitkomst was a critical requirement for the company at this stage in its life cycle.

“The colliery provides CoAL with a cash-generating asset that will assist in the funding of the business while the Makhado Project is being developed, covering a significant portion of the company’s overhead costs,” Brown said. “The high-grade metallurgical coal products sold by the Uitkomst Colliery facilitates access to these markets, providing further insight while the hard coking coal marketing strategy for the Makhado Project is being finalised.”