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Continental Coal To Extend Ferreira Coal Mine Life With Licence Acquisition

Continental Coal (ASX: CCC) has acquired the Prospecting Right adjoining its Ferreira Coal Mine in South Africa which will ultimately extend the operating life of the high quality thermal coal mine.

South African subsidiary Mashala Resources recently entered into a sale and purchase agreement with Misty Sea Trading to acquire and develop the Prospecting Right.

Mining of between 350,000 and 400,000 run of mine tonnes is forecast to be completed in about eight months.

Continental has already begun mine planning work on the Prospecting Right to incorporate the adjacent block into the Ferreira Coal Mine's existing mine plan.

A 15-hole exploration and resource confirmation drill program has been finalised and drilling has started.

Continental plans to begin development of the Prospecting Right once relevant approvals have been obtained.

Further expansion

Continental is in negotiations with other parties to acquire further Prospecting Rights that are contiguous and near to the Ferreira Coal Mine.

Laying the foundations for strong growth

Highlighting the rapid progress being made by Continental at its South African operations, early last month the company's joint venture partner and operator of the Vlakvarkfontein Coal Mine, Ntshovelo Mining Resources, executed a coal supply agreement with South Africa's state utility company Eskom.

The agreement is for the supply of 720,000 tonnes per annum of thermal coal over an initial three year period.

Importantly, this is a landmark agreement that positions the Vlakvarkfontein Coal Mine as one of only 25 direct suppliers of coal to Eskom in South Africa.

Continental has laid the foundations and has funding in place for substantial growth and a forecast increase in earnings.

The company has a current run of mine production of 2 million tonnes per annum of thermal coal with sales to the international export and domestic markets.

Continental also has a third coal mine currently under development that is forecast to double export thermal coal sales and group earnings in 2012.

A fourth mine Bankable Feasibility Study has been completed confirming a technically and economically viable operation that is forecast again to again double export thermal coal sales and group earnings in 2013.

When in operation the De Wittekrans Coal Project is expected to produce over 0.8 million tonnes of export sales, over 1.7 million tonnes of domestic sales, and annual earnings before interest, taxes, depreciation and amortisation in excess of US$50 million.

Continental's goal is to achieve 7 million tonnes per annum of run of mine coal production in 2013.

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