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Australian-listed exploration and development company Continental Coal‚ which has operations in SA‚ is making progress in completing its third thermal coal mining operation.

“Development activities at the Penumbra Coal Mine continued in May 2012 with the primary focus continuing to be the advance of the twin declines by the decline development contractor‚ Murray & Roberts‚” said the company.

According to the company‚ Murray & Roberts advanced the twin decline development a further 98m‚ an increase on the 58m achieved in April.

Other activities at the Penumbra Coal Mine site included the awarding of civil and building contracts to supply and erect the prefabricated buildings‚ stores and workshops on site.

In addition tenders were closed for the water reticulation system‚ water treatment plant and main ventilation fan.

The low voltage ventilation fan substation design and quote was also received.

The company added that construction commenced for the 630kVA and 1250kVA transformers and containerised medium voltage substations‚ both of which are scheduled for completion in June.

The Penumbra Coal Mine will be the company’s third thermal coal mining operation in South Africa.

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

The twin declines are being developed at a 1:7 inclination from the high-wall. The declines will each have a length of approximately 390 metres.

One of the declines will be equipped with a conveyor and the second serving as a trackless equipment travelling route.

The declines will also serve as the ventilation intakes of the mine.

Two mechanised continuous miner production sections and one stone development section are planned.

Continental plans to produce 750‚000 tons per annum of ROM coal that will be beneficiated through the existing Delta Processing Operations‚ which comprises a 1.8mtpa coal processing plant and the 1.2mtpa Anthra Rail Siding.

Sales of 500‚000 tonnes per annum of a high quality export thermal coal are forecast to commence in the fourth quarter of the year.

The export thermal coal product will be transported by rail through to the Richards Bay Coal Terminal and sold under existing off-take agreements.

At forecast average total FOB costs of R490/t‚ based on the terms the company had entered into in May‚ the Penumbra Coal Mine is forecast to generate annual free cashflow of between US$15m - $20m and benefits from the company’s robust coal price hedging programme that has been established on approximately 665‚000t at an average price of R1057/t. - I-Net Bridge