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Continental Coal executive to drive production from South African coal project in 2010

South African focussed emerging coal producer, Continental Coal (ASX: CCC) has recommenced trading after a trading halt to announce the appointment of Mike Neil as Chief operations officer.

The appointment provides a key next step toward coal production commencing in South Africa in 2010.

The company is currently finalising the appointment and mobilisation of a mining contractor at its Vlakvarkfontein Coal Mine in South Africa, as well as negotiating long-term off take agreements for its domestic coal sales with Eskom.

Vlakvarkfontein is scheduled to initially commence production with 50,000 tonnes per month moving to 100,000 tonnes per month on a contract mining basis.

Importantly, the Vlakvarkfontein Coal Mine is now pre-qualified to supply coal to ESKOM.  Continental’s submission was to supply coal suitable for Eskom power stations, such as the Kendall, Kriel, and Matla base load stations, within the vicinity of Continental’s Vlakvarkfontein Coal Mine, which is currently under development and scheduled to commence production in the first quarter 2010.

The coal to be supplied to Eskom is a lower quality coal product that is to be produced in addition to the recently announced A and B grade export quality coal that coal washability analysis has confirmed can be produced.

Continental is also negotiating with a number of major global coal trading houses for export thermal coal sales.

Continental has near term production assets in energy challenged South Africa - (3 projects have valid mining rights in place – first production expected Q4 2009) to be developed as low cost, and conventional open cast and underground mines.  The company's resources are located within one of the world’s largest and most developed coal mining regions.

Mr Nell is a professional mining engineer, with more than 28 years of experience in the underground and opencast coal exploration, development and mining industry in South Africa.

His career includes mine and operations management experience with major coal mining companies such as Anglo Coal and senior executive positions with a number of emerging South African focussed coal mining companies, including Injula Mining and Homeland Energy.

Mr Nell was most recently Chief Operating Officer of Toronto Stock Exchange listed Homeland Energy Group Limited, a coal focussed exploration, development and production company, with projects in South Africa and North America.

He was Managing Director of Homeland’s South African subsidiary, Homeland Mining and Energy SA, a position he successfully held for over four years.

In this role he was responsible for the acquisition, Bankable Feasibility Study and subsequent development and operation of the Kendal Coal Project into an open cast coal mine that is forecast to produce up to 1.8 million tonnes per year of run-of-mine coal to supply South Africa’s domestic thermal coal market.

Continental Managing director, Mr Bruce Buthelezi said "we are delighted to be able to announce the appointment of such a highly credentialed and capable Chief Operations Officer to the Company.”

Interestingly, from a recent Washability Data Report for the Vlakvarkfontein Project, washability simulations have indicated that the No. 2 and 4 seams are capable of producing A and B grade export quality coal from a primary wash, followed by Eskom quality coal from a secondary wash.

Based on the Report, with a ROM primary and secondary wash, a 40% yield of A/B grade quality export coal and 40% yield of local Eskom quality coal can be achieved.

The company said the ability to produce an export quality coal is expected to increase the profitability of the Project by approximately 50% based on current prices.

The Vlakvarkfontein Coal Mine is forecast to rampup to 350,000tpa of A and B grade export quality coal and 1,000,000tpa of domestic quality coal over an initial 10 year mine life.

Disclosure: The author holds no positions in the company