Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Continental Coal Granted Ferreira Coal Mine Extension, Sales To Increase

Continental Coal (ASX: CCC, AIM: CCC, COOL/US-OTCQX:CGFAY) will now be able to extend the Ferreira Coal Mine in South Africa after receiving Section 102 Approval from the Department of Minerals and Resources.

The approval will allow mining operations at the mine to extend from the current open cast operations across and into the two Prospecting Rights acquired earlier this year.

Importantly the extensions will provide up to an additional 750,000 tonnes of forecast ROM production from Ferreira - to be mined over the next 15 to 18 months.

ROM production for is now forecast at 650,000 tonnes, with sales of 420,000 tonnes of a high quality export thermal coal forecast from the extended Ferreira Coal Mine.

The thermal coal will be transported by rail through to the Richards Bay Coal Terminal and sold under existing off-take agreements.

Don Turvey, chief executive officer, commented on the approval: "The Section 102 approval from the Department of Mineral Resources, that extends over the Prospecting Right's acquired earlier in the year, not only allows us to materially extend our mining operations at the Ferreira Coal Mine, but also means that there will be now an overlap of coal supply as Penumbra underground is starting up.

"With almost twice the current ROM feed into the wash plant, the Delta Processing Operations will be producing almost double the current monthly export thermal coal sales in 2H FY 2013 once the Penumbra Coal Mine ramps up towards full production."

Terms of the approval

The approval allows the Company to extend the current opencast mining operations into adjacent Prospecting Rights, comprising Portions 25, 27 and 100 of the farm Witbank 262 IT, acquired in April and May 2012.

Under the terms of previously executed Sale and Purchase agreements with Morningtide Investments 367 (Pty) Limited and Misty Sea Trading (Pty) Limited, the Company secured the right to develop the Prospecting Rights.

The Prospecting Rights were acquired for a monthly royalty payment on each tonne of run-of-mine coal mined. The Section 102 approval extends over the Prospecting Rights that are both located immediately adjacent to and adjoining the current open cast mining activities being conducted by the company at the Ferreira Coal Mine.

The Company has completed all necessary mine planning work on the Prospecting Rights and incorporated it into the Ferreira Coal Mine's new, and extended, mine plan.

With the receipt of the Section 102 approval opencast mining activities now received, the company's opencast mining contractors can now commence mining activities in this area.

Analysis

Today's news of extensions to the Ferreira Coal Mine that will provide up to an additional 750,000 tonnes of forecast ROM production from Ferreira - to be mined over the next 15 to 18 months, follows yesterday's news that the Penumbra Coal Mine is on track and on schedule.

Proactive Investors considers that a fair value share price for CCC given the above and value of other coal assets is closer to $0.10 to $0.15 over the next 12-18 months.

Proactive Investors is a market leader in the investment news space, providing ASX "Small and Mid-cap" company news, research reports, StockTube videos and One2One Investor Forums.