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Continental Coal Beats South African Coal Production Forecasts

Continental Coal (ASX: CCC) has achieved a 40% quarter on quarter increase in run of mine coal production from the Ferreira Coal Mine in South Africa for the December quarter of 2012.

The December quarter marked the first full quarter of operations in the recently acquired Prospecting Rights adjacent to the Ferreira Mine.

Run of mine coal production from the mine for the quarter totalled 152,280 tonnes compared to the 109,935 tonnes produced in the September 2012 quarter.

This exceeds the ramp up production profile advised in the September 2012 quarterly report, where 125,000 tonnes and 150,000 tonnes of run of mine coal production were forecast for the December 2012 and March 2013 quarters respectively.

Monthly run of mine production has now increased for the past five consecutive months in the 2013 financial year.

Opencast mining operations advanced throughout the quarter, with run of mine coal production increasing from around 38,700 tonnes in October 2012 to around 57,550 tonnes in December 2012.

The run of mine coal production in December 2012, the highest monthly production to date in the 2013 financial year, was achieved despite the seasonal holidays.

Don Turvey, chief executive officer of Coninental Coal, commented: "Since the company's Ferreira Coal Mine started export sales in November 2010, we have exported over 1.1 million tonnes of a high quality thermal coal through the Richards Bay Coal Terminal.

"Our increasing production levels at the Ferreira Coal Mine and commencement of production at our newly developed Penumbra Coal Mine has been timely with record coal railings and investment by South Africa's rail operator Transnet into the dedicated Richards Bay Coal Line and coal exports at the Richards Bay Coal Terminal at its highest levels since 2006."

The Ferreira Coal Mine remains on track to achieve run of mine coal production of about 600,000 tonnes and sales of about 420,000 tonnes of a high quality thermal coal forecast for the 2013 financial year.

In fiscal 2013, Continental is forecasting total export thermal coal sales of 600,000 tonnes from the Ferreira and Penumbra Coal Mines and domestic thermal coal sales of 1.3 million tonnes from the Vlakvarkfontein Coal Mine.

Mine extension

In late September 2012, Continental received approval from the Department of Mineral Resources to extend the Ferreira Coal Mine opencast mining operations into adjacent and adjoining Prospecting Rights previously acquired.

Mining operations in the September 2012 quarter had previously been challenged with operations having reached the mining boundary and a resultant reduction in production.

During the December 2012 quarter, Continental and its mining contractors successfully completed the initial pre-stripping for the new opencast mining operations and moved around 1.3 million BCM of material.

Cost reduction

Mining costs per tonne and total production costs per sales tonne have reduced over the December 2012 quarter as the mine moved towards steady state operations.

Mining costs per tonne and total production costs per sales tonne reduced by over 30%.

For the 2013 financial year to date mining costs per tonne and total production costs per sales tonne at the Ferreira Coal Mine remain below budgeted levels.


Continental continues to grow its cash generative profile with the Ferreira Coal Mine extension now fully operational, as well as the Penumbra Mine ramping up to full production by the end of the 2013 financial year.

The company also has a fourth thermal coal mine in development, where a Feasibility Study and optimisation work has been completed.

The Vlakvarkfontein, Ferreira and Penumbra Coal Mines are set to produce at an annualised rate of 2.8 million tonnes per annum of thermal coal for the export and domestic markets.

The addition of another coal mine operation in South Africa will build further on Continental's record run of mine coal production in the region.

Following the start-up of Continental's third mine, Penumbra, in November last year Proactive Investors commented: "The current valuation of $20.9 million (share price of $0.047) for Continental does not reflect the incoming cash generation profile.

"Proactive Investors considers that a fair value share price for the company - given the above and value of other coal assets - is closer to $0.075 to $0.10 in the next 12 months."

Since then Continental's share price has risen 47% and is now trading at just under $0.07, after reaching a high of $0.072 today.

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