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
Environmental Affairs Minister Edna Molewa has dismissed an appeal against the environmental authorisation (EA) amendment for CoAL’s Vele colliery.

The EA amendment was granted in January in terms of the National Environmental Management Act and appeals were lodged in April by the Vhembe Mineral Resources Forum.

In evaluating the grounds for the appeal, the Minister considered the fact that the EA amendment would not pose any additional impacts to those considered in the EA originally issued.

“We welcome this decision by the Minister and remain firmly committed to the coexistence model implemented at Vele, which seeks cooperation between mining, agriculture and heritage land uses. The Minister’s decision represents another step towards getting the Vele mine back into production,” CoAL CEO David Brown has said in a statement.

CoAL will continue to progress the renewal and amendment applications in respect of Vele’s integrated water-use licence (IWUL) application under the South African National Water Act.

The colliery was placed on care and maintenance in 2014 in preparation for the approval and construction of the plant modification project, as well as an assessment of forecast global coal prices.

The company previously submitted applications to amend and renew Vele's IWUL and expects these to be granted during the second half of the current financial year.

The existing IWUL is valid until March 2016.

The company has also subsequently decided to obtain approval relating to a nonperennial stream diversion. This decision is expected only in the second half of the 2016 financial year. The company will await all regulatory approvals before the final decision to proceed is placed before the board.

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