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Universal Coal’s South African coking coal assets could spur on increased investor interest in 2012

Universal Coal (ASX: UNV) is determined to position itself as a coking and thermal coal producer with the company’s two early-stage coking coal exploration projects in South Africa’s Limpopo province set to be a game changer.

Chairman Tony Harwood told mining journalists at a media briefing in Johannesburg today that after the successful ASX IPO listing of the company in December 2010, based on a number of attractive near-term thermal coal production assets, the coking coal projects also held by the company were likely to be the catalyst for substantial and increasing investor interest during 2012.

Although Universal’s thermal projects are at a more advanced stage, its coking coal projects will be a major focus for the company in 2012.

Harwood said its Berenice-Cygnus coking coal project, which has a gross in situ resource of 1.3 billion tonnes from the first phase of drilling, is already attracting interest.

Berenice-Cygnus, in the emerging Soutpansberg Coalfield near the Mozambique and Zimbabwe borders, is located 30 kilometres from a railway siding linked to both Maputo and Richards Bay ports.

Importantly, the project has the potential to become a 10-15 million tonne run of mine operation by 2015.

A second phase of drilling, to prove-up the resource further, is scheduled to begin in early 2012. A Scoping Study is already underway.

Universal’s second coking coal project is also considered highly prospective and has a gross in situ resource of 274 million tonnes with a conceptual exploration target of 1-2 billion tonnes.

Thermal Coal

An optimised Bankable Feasibility Study on its Kangala thermal coal project in the Mpumalanga Province is close to completion.

This particular project – which is planned to be a low cost, open pit 2.5 million tonne per annum run of mine operation – has the potential to be the first of Universal’s five South African coal projects to be brought into production. 

Kangala currently has a JORC Resource of 124 million tonnes, with 48.7 million tonnes of that in the higher confidence Measured category. Additional drilling is underway to upgrade the Inferred Resource.

Harwood said there is already considerable interest in the coal products being planned for the project, and offtake discussions for the bulk of Kangala’s production are well advanced, including with thermal coal users in South Africa’s Witwatersrand industrial heartland.

Development of Universal’s two other thermal coal projects, Roodekop and Brakfontein, is scheduled to begin in 2013 and 2014 respectively.

Harwood said his goal in 2012 is to achieve market recognition of the potential of the thermal coal projects to provide a robust and profitable platform for growth, and to fully exploit the potential of the coking coal assets that are set to redefine Universal’s business and its increasing appeal to investors.