Name and Location
Penumbra coal project, Mpumalanga, South Africa.

Client
Continental Coal.

Project Description
The Penumbra coal project has total Joint Ore Reserves Committee-compliant resources of 25-million tons, contained within the C-lower coal seam, at an average seam height of 1.8 m and a depth of between 50 m and 115 m.

It is located in the Ermelo coalfield, 3 km from the Ferreira opencast mine and 2 km from the Anthra railway siding on the coal line to Richards Bay, in Durban, KwaZulu-Natal.

The project will be developed as a conventional underground bord-and-pillar mining operation. Access to the coal seam will be established through a portal and the sinking of twin declines at 8° to the coal seam. The declines will be about 200 m long; one will be equipped with a conveyor and the other will serve as a men-and-materials access route. They will serve as the primary ventilation intakes of the colliery, each with airflow velocities within industry norms.

Two mechanised coal-production sections are envisaged, each with a continuous miner. One section will be equipped with three shuttle cars, which are better suited to midseam mining heights and the other with battery haulers, which are better suited to low-seam mining heights.

The mine is forecast to produce yearly run-of-mine production of 750 000 t. The coal produced will be beneficiated through the existing Delta processing operation, which comprises a 1.8-million-ton-a-year coal processing plant and the 1.2-million-ton-a-year Anthra rail sliding.

It is planned that the mine will produce about 500 000 t/y of primary export thermal coal and 120 000 t/y of secondary domestic-quality thermal coal. The overall yield is 81%.

The export product will be railed from the existing rail siding to the Richards Bay Coal Terminal, under existing rail contracts, and sold under existing offtake agreements.

Value
The total forecast cost to complete the project is R328-million.

Duration
Development started in September 2011, with the excavation of the box-cut to a depth of 18 m, followed by the development of the twin declines. The first blast in the decline was completed in early February 2012.

Full production is scheduled for June 30, 2013.

Latest Developments
Continental Coal has reported that, since it started coal production of the C lower coal seam, with the first Joy 14HM15 continuous miner in December 2012, activities at Penumbra have focused on the development of underground mine infrastructure and services at the base of the twin declines; the establishment of underground workshops, substations and water management infrastructure; the development of additional mine production panels ahead of commissioning of the second Joy 14HM15 continuous miner; and the employment of additional mining personnel.

Run-of-mine (RoM) production in January 2013 was 14 031 t, compared with 2 694 t in the previous month representing an increase of more than 400%. RoM coal has been processed through the Delta processing operations and primary export yields of 37.2% were achieved in the month – a significant improvement on primary export yields of 26.2% achieved in December 2012. Primary export yields of 67% are forecast to be achieved once the Penumbra mine has achieved steady-state operating levels by June 2013.

Export sales from the mine continued in January 2013 totalling 5 212 t, compared with 854 t in the previous month. Export thermal coal sales have been made directly from the company’s Anthra rail siding, through its own rail and port allocations from the Richards Bay Coal Terminal, and sold on the export market under existing offtake agreements.

Continental is preparing to start the commissioning of the second Joy 14HM15 continuous miner underground in the second section. Production from the second section is forecast to begin by the end of February 2013 and will lead to a further increase in RoM production.

Completion of the outstanding mine development and construction activities by the company is ongoing. More than 90% of the planned project capital expenditure has been committed and more than 80% expended. The remaining underground capital development and surface infrastructure, including the main ventilation shaft fans and shaft, are the only key outstanding developments, which are forecast to be completed by April 2013, with all outstanding capital and development capital costs to be met from the ABSA Capital Debt Facilities.

Key Contracts and Suppliers
Murray & Roberts (twin declines), Leomat (civils contract), Joy Mining Machinery (underground mining equipment) and ABSA Capital (loan facility).

On Budget and on Time?
The project is on time and is expected to be completed within the approved budget.

Contact Details for Project Information
Continental Coal CEO Don Turvey, tel +27 11 881 1420 or fax +27 11 881 1423.
ABSA Capital marketing and communications associate principal Graeme Coetzee, tel +27 11 895 6695, cell +27 79 695 9798 or email graeme.coetzee@absacapital.com.
M&R corporate communications executive Ed Jardim, tel +27 11 456 6200, fax +27 11 455 1322 or email eduard.jardim@murrob.com.
Leomat, tel +27 35 797 4611, fax +27 35 797 3344 or email info@leomat.net or construction@leomat.net.
Joy Mining Machinery (South Africa), tel +27 11 634 2226, fax +27 11 634 8923 or email southafricasales@joy.com.