South African thermal coal producer Continental Coal said last week its Penumbra coal mine was on track to reach steady-state production of about 63 000 t a month by June.

The coal mining and exploration company last week reported that the mine, which was being ramped up to produce about 750 000 t/y of run of mine (RoM) coal, had produced 14 031 t of coal in January.

This was a significant increase on the 2 694 t in December 2012, which was the mine’s first month of operation.

Continental said in a statement that it was now preparing to start the commissioning of a second continuous miner in a second underground section. Production from this section would start by end-February and would lead to a further increase in output.

Underground RoM production for February was expected to be between 20 000 t and 25 000 t, while March was expected to deliver between 35 000 t and 40 000 t of RoM coal production.

Meanwhile, the coal producer said the Penumbra mine development remained within the budgeted R328-million.

More than 90% of the planned project capital expenditure had been committed, with more than 80% expended.

The remaining underground capital development and surface infrastructure, including the main ventilation shaft fans, would be completed by April.

Further, output at Continental’s Ferreira coal mine increased by 12% month-on-month to 56 886 t of RoM coal in January. This exceeded the mine’s ramp-up production profile.

In addition, the Vlakvark-fontein coal mine’s production for January remained steady at 103 751 t.

Continental Coal also reported that the $10-million sale of its shareholding in Vanadium and Magnetite Exploration & Development Co (VanMag) remained on track to be finalised later this month.

The company announced in December that it had received an initial $1-million nonrefundable payment from the Chinese buyer of its VanMag stake.

A further $3-million had now been received, with the remaining $6-million expected to be paid later in February.

Continental was using the $10-million to buy the minority interests in Mashala Resources it did not already own.

This would give its South African subsidiary full ownership of the Ferreira and Penumbra export thermal coal mines, as well as the De Wittekrans coal project, which was expected to become Continental’s fourth coal mine.

Further, the coal producer highlighted that its discussions and negotiations with regard to a potential long-term offtake agreement, a strategic partnership and a standalone funding agreement for the De Wittekrans project had “advanced significantly” over the past two months.

“Discussions with India-based coal and power utility companies and major global commodity trading groups have focused on the finalisation of a partnership and funding arrangement that will allow [Continental] to fully fund the planned initial seven-year opencast mine into development, provide a major portion of the funding required for the subsequent forecast 30-year underground mine development and secure a long-term strategic offtake partner for the planned exports of thermal coal product ideally suited for the Asian markets,” the company stated.