COAL’S reserves soar on acquisition

COAL of Africa’s (CoAL’s) substantial coal reserves in the Soutpansberg in Limpopo promise to herald the next step for the mining and exploration company.

Releasing its updated resource and reserves estimates yesterday‚ the JSE-listed company said its acquisition of the Soutpansberg coalfield had led to a 429% rise in its estimated coal reserves to 8billion tons.

CoAL has concluded its acquisition of the Soutpansberg coalfields‚ along with new-order prospecting rights‚ from Rio Tinto Mineral Development and Kwezi Mining. The coalfields have been grouped into three proximate regions‚ namely Mokopane‚ Makhado and Chapudi, and were acquired for $75m.

“The additional prospecting rights represent an important development in the evolution of Coal of Africa and its partner, Rothe Investments‚ by consolidating the potential coking and thermal coal assets in the Soutpansberg coalfield‚” said CoAL CEO John Wallington yesterday.

He said the coalfields also gave the group’s operations flexibility, due to environmental concerns that mining companies often had to deal with.

“These significant resources give us a dominant position in the industry,” Mr Wallington said.

The extent of the resources will also mean that the bulk of CoAL’s projects will move up the value chain, that is from the exploration phase to the development and mining phases.

Regarding progress in developing the Makhado project, Mr Wallington said investors would be told in the coming months whether the group had managed to obtain buy-in to the project by Exxaro, SA’s second-largest coal producer, which holds 30% of options in the project.

CoAL intends to spend about $500m towards developing the Makhado project, which it expects to produce 2,2-million tons of hard coking coal a year.

Mr Wallington reiterated that the group would be able to conclude a memorandum of agreement with the Save Mapungubwe Coalition, an environmental action group that has taken CoAL to task to mitigate the impact of the company’s Vele Colliery on the Mapungubwe heritage site in Limpopo.

Shares in CoAL jumped almost 5% yesterday after the group announced the substantial increase in its gross resources and reserves estimates. CoAL’s share price closed 4,95% higher at R4,88 after reaching an intraday high of R5 earlier.