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Universal Coal Confirms Sustainable 10mtpa Coking Coal Project In South Africa

Universal Coal (ASX: UNV) has completed a Concept Study for its Berenice-Cygnus coking coal project in South Africa which shows potential for a sustainable 10 million tonne per annum open cast operation.

The mine will produce both primary soft coking and secondary thermal coal products over a mine life of in excess of 25 years.

Importantly, the Concept Study confirms the Berenice-Cygnus project is viable at this stage of its development.

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.

The project has a gross in situ resource of 1.3 billion tonnes from the first phase of drilling.

Tony Weber, chief executive officer, commented on the positive developments:

"We are very pleased to be advancing the Berenice-Cygnus project with clarity now over its sustainable viability.

"This project is strategically important to Universal given its position within the emerging Soutpansberg coking coalfield and the quantum of available resource.

"The company is now working on further mine planning and logistical supply chain strategies ex-mine including rail and port, in addition to commencing preliminary identification of potential markets for the coal both domestic and for export."

Universal has begun the second phase of drilling at Berenice-Cygnus with 12 holes completed to date.

The company aims to upgrade the Inferred and Indicated Resources within the open pit areas to the Measured Category.

The program comprises 95 slim diameter and a further 29 large diameter holes, to be completed over two phases.

The second phase will focus on the drilling out of the southern open pit area and is expected to be completed in the September quarter of 2012.

Key junior coal supplier

Earlier this month Universal announced an offtake agreement with major South African power utility Eskom is well advanced.

Universal is finalising a binding Coal Supply Agreement Term Sheet included in a Memorandum of Understanding with Eskom.

The company expects to execute coal supply agreements with Eskom by mid-2012, after which Universal will begin mine development at its Kangala Coal Project in the second half of 2012 ahead of first coal deliveries in the second half of 2013.

The agreement set to be executed with Eskom is for around 2 million tonnes per annum for an initial eight years, which will be renewable for a minimum of another eight years as the increased resource base becomes available.

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