30 April 2012
REPORT FOR THE QUARTER ENDING 31 MARCH 2012
Continental Coal Limited ("Continental" or "the Company") is pleased to provide
its operations report for the quarter ended 31 March 2012.
* Total run-of-mine thermal coal production for the Quarter of 479,003 tonnes
at the Ferreira and Vlakvarkfontein Coal Mines up from 474,934 tonnes in
* Thermal coal sales for the Quarter from the Ferreira Coal Mine, Delta
Processing Operations and Vlakvarkfontein Coal Mines of 424,040 tonnes a
decrease from the 487,672 tonnes in the previous quarter
* Development of the Penumbra Coal Mine continued during the Quarter with the
twin declines significantly advanced and key underground mining equipment
ordered with first coal production scheduled for September 2012
* Consultants commissioned to complete optimisation study on the De
Wittekrans Coal Project with focus on process plant, rail siding and
* Satisfaction of all outstanding conditions for settlement of the Company's
Broad Based Black Economic Empowerment transaction with Sishen Iron Ore
Company Community Development Trust ("SIOC-cdt") and initial settlement of
ZAR40m completed subsequent to the Quarter's end with the ZAR100m balance
due in May 2012
* Coal supply agreement for the Vlakvarkfontein Coal Mine executed with South
Africa's state utility company, Eskom, with thermal coal sales commenced in
* Strengthening of the Board with the appointment of Mike Kilbride, Johan
Bloemsma and Connie Molusi as non-executive directors of the Company
* Company reports unaudited revenue of A$20m, gross profit from operations of
A$4m and EBITDA of A$1.6m for the Quarter
The third quarter of the 2011/12 financial year saw the Company's South African
thermal coal mining business continue to perform strongly with production and
sales from the Ferreira and Vlakvarkfontein Coal Mines and Delta Processing in
line with budgets. In addition development of the Company's third mine, the
Penumbra Coal Mine, continued, with the current focus on the advance of the
twin declines by the decline development contractor, Murray & Roberts.
The Company reported unaudited consolidated sales revenue of A$20m, gross
profit from operations of A$4m and EBITDA of A$1.6m for the Quarter. As at 31
March 2012, the Company had cash balances of A$6.6m (excluding the ZAR40m
proceeds received from SIOC-cdt subsequent to the Quarter's end, the ZAR100m
balance due on 4 May 2012 and undrawn ABSA Capital project finance debt
facilities of US$35m for the Penumbra Coal Mine development).
Health and Safety
The rolling 12 month Lost Time Injury Frequency Rate ("LTIFR") for both the
Ferreira Coal Mine and Delta Processing Operations remains at zero. The
Vlakvarkfontein Coal Mine also reported no Lost Time Injuries for the Quarter
with the current LTIFR at 2.88.
During the Quarter the Ferreira Coal Mine was recognised by the Chief
Inspectorate of Mines and Department of Mineral Resources for achieving 3,000
fatality free production shifts. The Ferreira Mine was further recognised with
a third prize award at the Coal Safe 2012 Annual Colliery HSEC Campaign
Performance Awards for achieving a zero LTIFR.
Mine Operations - Vlakvarkfontein and Ferreira Coal Mines and Delta Processing
OPERATIONS PERFORMANCE FOR 3 MONTHS TO MARCH 2012
Vlakvarkfontein Ferreira Mar 2012 Dec 2011 DIFF (%)
ROM Production 317,515 161,488 479,003 474,934 +1%
Coal Purchases - 65,661 65,661 86,078 -24%
Coal Processed - 257,711 257,711 261,990 -2%
Yield 100% 60.4% 60.4% 55.6% +9%
Coal Produced 317,515 155,855 473 370 442,757 +7%
Export Coal - 155,855 155,855 145,697 +7%
Domestic Coal 317,515 - 328,082 297,060 +10%
Coal Sales 278,284 145,756 424,040 487,672 -13%
Export Sales - 145,756 145,756 178,450 -18%
Domestic Sales 278,284 - 278,284 309,222 -10%
Run-of-mine coal production of 479,003t from both the Vlakvarkfontein and
Ferreira Coal Mines over the Quarter was 1% above the previous quarter's
production of 474,934t.
Production from the Ferreira Coal Mine was 161,488t ROM against a budget of
148,955t. This was 9% below the 177,833t ROM achieved in the previous quarter.
A total of 257,711t was processed through the Delta Processing Operations, 27%
above the budgeted 203,402t, and 2% below the record 261,990t processed in the
previous quarter. A primary yield of 60.4% was achieved for the Quarter a 9%
increase on the 55.6% primary yield achieved in the previous quarter. Buy-in
coal for the Quarter was 65,661t, a 24% reduction on the previous quarter and
reflected the availability of supply from nearby mining operations that have no
washing or logistics access.
The Vlakvarkfontein Coal Mine produced 317,515t ROM, 7% above the 297,060t ROM
achieved in the previous quarter.
Total thermal coal sales during the Quarter of 424,040t were achieved, a 13%
reduction on the previous quarter and due to lower railings of export thermal
coal to the Richards Bay Coal Terminal. Export thermal coal sales of 145,756t
of a high quality export thermal coal was railed and sold FOB Richards Bay Coal
Terminal. Domestic thermal coal sales of 278,284t were achieved in the Quarter,
of which 262,893t were delivered to Eskom. From 1 March 2012, direct deliveries
to Eskom from the Vlakvarkfontein Coal Mine commenced, following execution of a
Coal Supply Agreement during the Quarter. The Vlakvarkfontein Coal Mine is one
of only 25 direct suppliers of coal to Eskom in South Africa.
Penumbra Coal Project
Development activities at the Penumbra Coal Mine continued throughout the
Quarter. The majority of the civil work on site was completed during the
Quarter. This included the pollution control dam, silt traps and storm water
channels. In addition, installation of the 22kV power line from the sub-station
at the Delta Processing Operations to the mine site was completed, with Eskom
power of 3.5MVA available on site from the beginning of March 2012.
The advance of the twin declines by the decline development contractor, Murray
& Roberts commenced during the Quarter. Construction of the site office laydown
area with the necessary concrete slabs, offices, change house and workshops was
completed early in the Quarter. Preparation of the twin declines, being the
belt and the travelling roads, was also completed in February 2012. First
development blast in the twin declines took place on 6 February 2012.
The twin declines will have a final length of 390m, with one of the declines
equipped with a conveyor and the second as a trackless equipment travelling
route. As at the end of the Quarter the conveyor road had been developed 61.4m
and the travelling road developed 16m.
During the Quarter the Company placed orders for all key underground mining
equipment, with Joy Mining Machinery for two 14HM15 Continuous Miners and four
10SC32 Shuttlecars; and with Rham Equipment for two Front End Loaders and two
Roofbolters. In addition, a temporary shaft conveyor system was installed and
was commissioned subsequent to the Quarter's end. Tenders for the orders for
the permanent conveyor structure, shaft gantry and drives are currently being
finalised by the Company and will be awarded in the current quarter.
To date approximately 50% of the Penumbra Coal Mine development capital has now
received firmed quotes from the preferred contractors, construction companies
and suppliers that are in line with the Company's budget of approximately
US$40m. All current development activities are proceeding in line with this
budget with first coal production from the C-lower seam scheduled in September