The BFS optimisation confirmed saleable coal tonnages of about 2.1 million tonnes per annum, achieved via a planned 2.4Mtpa run of mine production rate over the life of the mine.

The initial pit is tipped to deliver an eight-year mine life from a defined and proven 19.4Mt resource.

There is scope for the mine life at Kangala to be increased to more than 16 years, with the pit located adjacent to properties with an additional 65Mt of indicated and inferred resources.

Meanwhile, Universal said it was well advanced in finalising a binding coal supply agreement term sheet with Eskom, which is part of a memorandum of understanding with Africa’s largest power utility company.

The company is expecting to execute the coal supply agreement with Eskom in mid-2012.

Preceding this, Universal will start mine development at Kangala, with first coal production expected in the second half of 2013.

The agreement to be signed with Eskom will see Universal supply 2Mtpa to the utility company for an initial eight years.

It will be renewable for another eight years as the increased resource base at Kangala becomes available.

Universal’s Kangala project will be an open pit mine located about 65km east of Johannesburg in the Witbank coalfield.

The company is awaiting the awarding of a water licence for Kangala, anticipated to be received in the June 2012 quarter.

Just last week, Universal secured a $A12 million converting note facility from financial institution Susquehanna International Group.

The strategic funding with Susquehanna will enable Universal Coal to advance works on the Kangala and Berenice-Cygnus projects and will also provide it with general working capital.