Name and Location
Vele colliery expansion project, Limpopo, South Africa.

Client
Coal of Africa Limited (CoAL).

Project Description
As at September 28, 2012, Vele had Joint Ore Reserves Committee-compliant resources of:
• 795.7-million gross tonnes in situ and 672.9-million mineable tonnes in situ of shallow-dip coal;
• 362.5-million tonnes, including 42.4-million tonnes of proven reserves and 325.6-million tonnes of probable reserves; and
• 42.4-million tonnes of run-of-mine (RoM) from the central and northern pits over a 16-year period, producing 16.5-million tonnes of saleable product.

The mine is currently configured as an opencast mine, but underground mining is a possibility in the future, owing to the significant resource.

A modular coal treatment plant was established during the first phase of the project.

CoAL is modifying and expanding its Vele colliery beneficiation plant, which will enable CoAL to optimally produce semisoft coking coal, thermal coal and sized coal simultaneously at an expected processing capacity of 2.7-million tonnes a year of RoM. The planned three-month front-end engineering and design (Feed) process will enable CoAL to arrive at a class 1 engineering, procurement and construction estimate.

The scope of work for the Feed contract includes:
• identifying and improving sections of the existing plant to ensure a 500 t/h throughput capacity;
• a stockpile management philosophy and associated design;
• an RoM handling, crushing and screening section;
• a destoning wash plant;
• a sized-coal screening plant;
• a classifier in the fines beneficiation circuit;
• a froth flotation plant for the beneficiation of the ultrafines; and
• products and discard stockpiling and load-out facilities.

Value
The total capital expenditure to complete plant modification is estimated at R450-million and includes the necessary mine development and production ramp-up.

Duration
The expansion project will be completed by the end of 2015, with production ramp-up in early 2016.

Latest Developments
The Department of Environmental Affairs (DEA) has granted CoAL’s Vele colliery an amendment to the environmental authorisation in terms of the National Environmental Management Act and the Environmental Impact Assessment Regulations.

This amendment is the first of several required to enable the company to make planned modifications to the colliery’s processing plant and is a step toward the project achieving the full regulatory compliance required for construction to start.

CoAL CEO David Brown has welcomed the DEA’s decision, adding that the group will await the receipt of all regulatory approvals before starting with the modification of the plant.

The company has also sought a renewal of its integrated water-use licence (IWUL) and its amendment.

The current IWUL will expire in March 2016 and the company feels it is prudent to renew this licence before committing further shareholder funds to the project.

The approval of the renewal is expected in the second quarter of this year.

Brown has said that CoAL will continue to engage with regulatory authorities and other stakeholders at Vele while setting a new benchmark for the coexistence between mining, agriculture and heritage land uses within the area in which the company operate.

This period will also give the company further time to assess the outlook for coal prices.
Meanwhile, discussions continue with appropriate end-users regarding offtake agreements.

Key Contracts and Suppliers
Sedgman South Africa (Feed).

On Budget and on Time?
Not started.

Contact Details for Project Information
CoAL head of engineering, Nico Pretorius, email nico.pretorius@coalofafrica.com; or investor relations and business development manager Celeste Harris, email celeste.harris@coalofafrica.com