Continental Coal delivers record thermal coal production in October, Socius SG II ups stake

Nov. 20, 2011 6:54 PM ET
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Continental Coal (ASX: CCC) has achieved record monthly run of mine coal production and record high quality export thermal coal sales for the month of October from the Ferreira Mine and Delta Processing Operations in South Africa.

During October, run of mine coal production of 69,228 tonnes at the Ferreira Mine was achieved, 13% above the average monthly production in the September quarter. The Delta Processing Operations washed a total of 81,642 tonnes for the month.

Railings to the Richards Bay Coal Terminal from Continental’s Anthra Rail Siding for the month totalled 64,191 tonnes of high quality export thermal coal.

This represents a 47% increase on the average monthly tonnes railed to the terminal during the previous quarter.


Vlakvarkfontein Coal Mine

During October, the Vlakvarkfontein Coal Mine achieved run of mine coal production of 102,796 tonnes, a 9% increase on the average monthly tonnes of run of mine production in the September quarter.

Continental sold 117,122 tonnes of thermal coal from the Vlakvarkfontein Coal Mine to the South African domestic market during the month.

This was approximately 9% below the record average monthly sales of 128,148 tonnes of domestic sales achieved in the previous quarter.



Wolvenfontein Acquisition


South African subsidiary Continental Coal (South Africa) has completed the acquisition of the Wolvenfontein Coal Project from South Africa-based Universal Pulse Trading for A$1.3 million (ZAR10.4 million) in equity.

The Wolvenfontein Coal Project is located approximately 80 kilometres east of Johannesburg and 4 kilometres south of the town of Delmas in the Nkangala District Municipality, Mpumalanga Province.

Importantly, the project is located less than 5 kilometres to the east of Continental’s Vlakplaats Coal Project, which has a total JORC Resource of 187.7 million tonnes, and is bordered by four operating collieries and a number of advanced coal projects.

These include Exxaro Resources’ 3 million tonne per annum Leeuwpan Mine and Universal Coal’s (ASX:UNV) 124 million tonne Kangala Project.

Wolvenfontein has an Inferred JORC Resource of 36.7 million tonnes, of which the majority is contained within the No. 2 Seam. The average reported depth to the top of the No. 2 Seam is 28 metres and the average thickness is 9 metres.

The Wolvenfontein Coal Project lies at the western extent of the Witbank Coal Field and is well located near roads and rail infrastructure.

Commenting on the acquisition, Continental chief executive officer Don Turvey said, “The acquisition of the Wolvenfontein Coal Project is an opportunistic acquisition and strategically important to the company given its proximity to the Vlakplaats Coal Project that we have in joint venture with KORES.

“These two coal projects now have in excess of 220 million tonnes of resources that we will be looking to advance through feasibility studies and towards development in the coming 18 to 24 months.”

The joint venture agreement between Continental and Korea Resources Corporation (KORES) over the Vlakplaats Coal Project is KORES’ first investment in South Africa’s coal sector.

It follows substantial investment in excess of US$2 billion by KORES in coal projects worldwide, including interests in 10 coal mines in Australia producing in excess of 25 million tonnes per annum.

In June, Continental boosted its total Inferred Resource for the Vlakplaats Coal Project by 54% to 187.7 million tonnes, up from the previous 122 million tonnes.



Socius SG II boosts shareholding

In other news, Continental’s substantial shareholder U.S. investment group Socius CG II has again increased its stake in the company and now holds 13.05%.

Socius purchased a further 20,906,797 shares for a consideration of $4,285,893, providing an average entry price of $0.205 per share.

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