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NCC development awaits coal supply agreement

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World Coal,

Production at Universal Coal’s NCC project in the Kriel District of Mpumalanga Province, South Africa, is all but ready to begin as the company awaits a coal supply agreement with state utility, Eskom, that will allow it to finalise the contracts for mining, coal handling and processing plant (CHPP), and discard handling operations.

The project is “awaiting coal supply agreement prior to onsite development activities with a view to starting production shortly thereafter,” the company said in its 4Q15 quarterly report. The company hopes to conclude the offtake agreement with Eskom in 1Q16.

“On the New Clydesdale Colliery, we are keen to begin commissioning activities ahead of first production, which remains subject to the conclusion of a coal supply agreement with Eskom,” said Universal’s CEO, Tony Weber. “We continue to engage with Eskom and hope to provide the market with an update in due course.”

In the meantime, Universal’s debt funding solution for the NCC development – which is again contingent on the final coal supply agreement – remains secured through Investec Bank. The debt funding will be used to cover contractor site establishment, boxcut development and infrastructure upgrades, including to the CHPP.

The company is also preparing to consolidate the mining rights for NCC with those it holds on the neighbouring Roodekop property, where fencing of the mining area was completed in 4Q16.

NCC will be the company’s second producing asset after the Kangala mine, also in the Witbank coalfield in Mpumalanga Province. Kangala produces 1.7 – 2 million tpy of thermal coal for South Africa’s domestic market.

Universal Coal is currently under a AUS$91 million take-over proposal from fellow South African coal miner, Coal of Africa (CoAL), which owns the Makhado metallurgical coal project. In a recent update, CoAL said it has received signed statements of intent to accept the offer from shareholders holding 40.1% of Universal’s’ share capital.

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