South African thermal coal production, development and exploration company Continental Coal’s preliminary final report for the 2012/13 financial year ended June 30 shows an increase of 15% to 2.3-million tons year-on-year in its total run-of-mine (RoM) production from its three operating mines.

An operations review indicates that produc-tion from the Vlakvarkfontein mine, in Mpumalanga, increased 23% year-on-year and contributed 1.5-million tons to total RoM production.

Vlakvarkfontein mine exceeded its planned production and also recorded free-on-truck (FoT) costs of R140/t, which was 6% below planned costs, comparing well with the R131/t recorded for the 2012/13 financial year.

The mine has demonstrated its ability to consistently deliver and exceed planned pro- duction and it is forecasted to deliver 1.3- million tons at a FoT cost of R152/t during the 2013/14 financial year, Continental Coal notes.

Meanwhile, the company mitigated an initial delay in the 2012/13 financial year in trying to obtain regulatory approval to expand its Ferreira mine, near Ermelo, in Mpumalanga, through its good production results in the latter part for the same period.

The company says that, while the mine is nearing the end of its life, as reserves are expected to be depleted by November, the Ferreira mine still produced 559 105 t of RoM coal during the year at a yield of 70.4%, a significant improvement on the 60.1% yield achieved in the previous year.

Free-on-board (FoB) costs of R662/t were recorded, below the South African inflation increase of 3% year-on-year.

Meanwhile, Continental Coal commissioned its third thermal coal mine – the Penumbra underground mine, in Mpumalanga – during the 2012/13 financial year, which produced its first coal in November 2012.

The company reports that the development and commissioning of the primary ventilation shaft was completed last month and, with the required ventilation now in place, the focus has shifted to achieve the planned monthly production rate of 63 000 t/m by next month.

“Notwithstanding the development activities during the year, the mine still managed to deliver 143 299 t to the Delta processing facility and Penumbra is forecasting the delivery of 600 000 t of RoM coal during the 2014 financial year at an FoB cost of R530/t,” the company notes.

In addition to this, the optimisation work for the De Wittekrans coal project, in Mpuma-langa, which was completed in November 2012, has confirmed the potential to substantially improve the project economics and reduce the capital expenditure necessary to bring the De Wittekrans project into production.

The optimisation work identified the opportunity to develop the De Wittekrans project as a major opencast and underground thermal coal mining operation, supplying domestic and international markets over an initial 30-year mine life.

Yearly production of 3.6-million tons a year is expected after the initial build-up phase.

Continental Coal reports that it has sub- mitted applications and all the accom- panying documentation for a new-order mining right – which was awarded last week – and an integrated water use licence for the project.

The company says that the project economic model is being updated to account for the changes proposed by the optimisation study and is planned for completion in the fourth quarter of this year.

Continental Coal CEO Don Turvey says the company achieved its goals set for the 2013 financial year to increase production and reduce its cost base, and adds: “This trend is set to continue in 2014, with our Penumbra mine building up to its planned production.

“The results of the optimisation studies for the De Wittekrans project are encouraging and the planned phased-development approach significantly reduces the development capital required to start production. “Obtaining the mining right for De Witte-krans in the current quarter will enable the board to review the planned development schedule,” notes Turvey.

Meanwhile, Continental Coal’s financial results review indicated sales of 1.8- million tons during the 2012/13 financial year. These results were only marginally lower than those of the previous financial year, mainly because of the acquisition of more than 250 000 t of coal from third parties, which was included in the sales of the previous financial year.

Further, the decrease in global thermal coal prices and the impact of the devaluation of the South African rand against the Australian and US dollar impacted on the net revenue of the A$62-million recorded.

The final report will be released on September 30.

Meanwhile, qualified chartered accountant and member of the South African Institute of Chartered Accountants Lou van Vuuren was appointed CFO, following the resignation of former executive director Jason Brewer.

Brewer will remain on the board of Con-tinental as a nonexecutive director.