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Continental Coal Completes Acquisition Of Mashala Resources

Continental Coal's (ASX: CCC AIM: COOL) 74%-owned South African subsidiary, Continental Coal Limited, has completed the acquisition of the outstanding minority interests in Mashala Resources.

The subsidiary now holds a 100% interest in the operating Ferreira and Penumbra Coal Mines, which produce a high quality thermal coal product that is exported through the Richards Bay Coal Terminal.

Continental Coal Limited also now holds a 100% interest in the De Wittekrans Coal Project, which is proposed to be developed as the company's fourth thermal coal mining operation in 2013.

The company is advancing offtake agreements, financing and strategic partnership discussions ahead of its initial open pit development.

Penumbra

The Penumbra Coal Mine, which only commenced underground production in November 2012, is set to achieve an annual export coal sales rate of 500,000 tonnes in June 2013.

The mines' product is sold under existing offtake agreements into predominantly Asian markets.

With exports at these levels to continue over an initial 10 year mine life, the mine will generate between US$15 and US$20 million (A$14.6-$19.4 million) of forecast cashflow based on current export coal prices.

De Wittekrans

The De Wittekrans Project currently has total gross saleable Proven and Probable Reserves of 43.8 million tonnes and gross in situ Measured, Indicated and Inferred Resources of 251.1 million tonnes.

It has the potential to become the company's "flagship" coal asset, generating strong returns, after Continental received positive preliminary results from optimisation work late last year.

This work identified the opportunity for De Wittekrans Coal Project to be a major mining operation producing 3.6 million tonnes per annum of run of mine coal over a 33 year mine life.

Annual sales of up to 2.4 million tonnes per annum of a thermal coal product, ideally suited for the Asian export market and South African domestic market, and annual sales revenue of up to US$145 million are forecast.

Operations outlook for 2013

Continental Coal's portfolio of projects includes three operating mines, the Vlakvarkfontein, Ferreira and Penumbra Coal Mines, which are set to produce at an annualised rate of 2.8 million tonnes per annum of thermal coal for the export and domestic markets.

In 2013, Vlakvarkfontein is expected to deliver 1.4 million tonnes of domestic sales, while Ferreira and Penumbra will produce 500,000 tonnes and 350,000 tonnes of high quality exports respectively.

Penumbra continues to ramp up to full production.

Meanwhile, the funding will be finalised for De Wittekrans and development will begin.

Continental held around A$1.2 million in cash at the end of December 2012 and also recently raised $8 million via a strategic placement to South Africa's Village Main Reef (JSE: VIL).

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