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Makhado project gets New Order Mining Right

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World Coal,

During 2013,Coal of Africa Ltd (CoAL) completed a Class II Definitive Feasibility Study on the Makhado project and aims to develop the coal mine to produce 2.3 million tpy of hard coking coal and a further 3.2 million tpy of thermal coal, for the duration of 16 years. The project can produce hard coking coal that has been benchmarked by independent consultants. It is also acknowledged that tests confirmed the coal could be successfully beneficiated to produce high strength coke for the steel manufacturing industry.

The South African Department of Mineral Resources (DMR) granted a New Order Mining Right (NOMR) in terms of the Mineral and Petroleum Resources Development Act (Act 28 of 2002) for CoAL’s Makhado hard coking and thermal coal project. CoAL was also granted the Section 11 approval, giving the right to CoAL’s entirely owned subsidiary – Baobab Mining and Exploration (Pty) Ltd.

Discussions have commenced between CoAL and potential customers as a result of the granting of the NOMR – an essential step in securing offtake agreements for the coal products.

The granting of the NOMR is key for CoAL to source required funds to develop the project. Construction for the project is anticipated to begin in 1H16 and is predicted to last 26 months plus an additional four-month ramp-up phase, by this times the project will be generating 5.5 million tpy of saleable product.

Subsequent to the Section 11 grant, the Makhado Colliery Community Development Trust, on behalf of seven local communities living in the surrounding area of the project, will acquire a 20% interest in Baobab. Yoright Investments (Pty) Ltd acquired 6% interest in Baobab by Mike Nkuna whose shareholder grouping will include other Historically Disadvantaged South Africans.

In order to obtain their interests in Baobab, both Yoright and The Trust will be given two years to produce adequate funds and negotiations of the final payment amount will be agreed with the company.

After the acquisition completion transactions, CoAL will own 74%, the Trust will own 20%, Yoright 6% of Baobab.

Edited by Harleigh Hobbs.

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