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Continental Coal Ramps Up Penumbra Production By 81%

Continental Coal (ASX:CCC) has exceeded its forecast for underground thermal coal production from its Penumbra Mine in South Africa, upping run of mine production by 81% in February.

Run of mine coal production of 19,352 tonnes was achieved for the month compared with 10,716 tonnes the previous month. Underground production for February was 27,311 tonnes, a 93% increase on January figures.

Production increased during the month as more panels were developed in the board and pillar underground operations and following the commissioning of the second Joy 14HM15 Continuous Miner in the second section.

Underground production of 35,000-40,000 tonnes is forecast for March 2013 with both Continuous Miners in full operation.

ROM production for the third quarter of 2013 of 75,000-80,000 tonnes is forecast with monthly budgeted ROM production of about 63,000 tonnes scheduled to be achieved by June 2013.

The company also achieved export thermal coal sales from the Penumbra Mine of 9,131 tonnes in February, which represented a 75% increase on the 5,212 tonnes of export thermal coal sales the previous month.

The Penumbra Coal Mine has JORC compliant proven and probable reserves of 5.44 million tonnes and total JORC measured, indicated and inferred resources of 68.3 million tonnes.

The underground mining operation is forecast to produce 750,000 tonnes per annum of ROM coal over an initial 10 year mine life at forecast average total FOB costs of ZAR490 per tonne (May 2011 terms), or about US$57 per tonne.

Meanwhile, its other two mines, Ferreira and Vlakvarkfontein, also exceeded the budgeted run of mine production for the month of February.

The Ferreira coal mine produced 63,456 tonnes, an increase of 37% from budgeted ROM production of 46,171 tonnes, while the Vlakvarkfontein production, at 143,872 tonnes, was up by 31% from budgeted production.

Continental Coal has built on its suite of coal operations in South Africa, having recently secured a cornerstone investor with Village Main Reef taking a 19.9% interest for an initial investment of about A$8 million.

The deal also adds to Continental's access to capital, with its cash position at the end of last quarter at about $4 million.

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