Run of mine (NYSEARCA:ROM) coal mined from the Penumbra Coal Mine over the past two weeks has been processed through the company's Delta Processing Operations.
Together with coal from Continental's Ferreira Coal Mine, the Penumbra coal has been sold into the export thermal coal market after being railed to the Richards Bay Coal Terminal.
Further export coal from Penumbra is expected to be loaded and despatched this week.
Continental began production at Penumbra, which is the company's first underground mine, in late November.
The mine is forecast to produce 750,000 tonnes per annum of ROM coal over an initial 10 year mine life at forecast average total free on board (FOB) costs of ZAR490 (A$54) per tonne (May 2011 terms).
Importantly, financial settlement of the first Penumbra Coal Mine coal hedge contracts for the December quarter resulted in a hedging gain of ZAR3 million.
In fiscal 2013, sales of about 200,000 tonnes of a high quality export thermal coal are forecast from the mine at total FOB costs of ZAR471 per tonne.
This is forecast to generate around US$17 million (A$16 million) in revenue this financial year and forecast to rise to about US$45 million in fiscal 2014, with between US$15 million and US$20 million of forecast free cashflow based on current export coal prices.
Underground mining accelerates
ROM production is forecast to increase with the commissioning of the second Continuous Miner in 2013.
Up to 95,000 tonnes of ROM coal production is planned in the March 2013 quarter, before reaching the targeted quarterly ROM production rate of 185,000 tonnes in the June 2013 quarter.
Underground coal mining activities at Penumbra have intensified over the past two weeks with the first of the two 14HM15 Joy Continuous Miners successfully commissioned and now in operation.
Decline development has also now been completed.
The Continuous Miner is currently cutting coal in the decline bottom development area and will be expanding the main underground development towards the upcast ventilation shaft in the 2013 financial year.
About 5,000 tonnes of ROM coal are forecast from operations in the current December 2012 quarter.
The planned ramp up of underground mining is on track with the second 14HM15 Joy Continuous Miner and associated equipment delivered to site in early December.
First project finance drawdown
Continental has also completed an initial drawdown of ZAR132 million of its secured debt project finance facility with ABSA Capital.
The ZAR253 million, seven year term loan facility and ZAR17.5 million standby facility will be used to fund the outstanding capital, mine equipment and working capital costs associated with the development and commissioning of the Penumbra Coal Mine.
Further drawings of the term loan facility are scheduled in the March 2013 quarter.
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