Coal of Africa has now completed formal negotiations with Transnet Freight Rail for rail services to Richard’s Bay from its Mooiplaats underground thermal coal mine.

The company will use a third party siding to load the coal while it builds it own Overvaal siding.

Coal of Africa has offered Transnet a five-year agreement with minimum 75% take or pay commitments. The company has already secured a 900,000tpa port allocation starting next year, with the hope of lifting levels to 3 million tonnes per annum once the terminal is expanded.

The Mooiplaats mine began cutting coal with its first continuous miner in November and has since taken delivery of another CM and shuttle cars. The second miner is expected to start cutting coal by the end of the year.

Four portals to 12 metres deep have now been cut and supported and cable support is also being extended into portals and attached to long anchors installed in the portals to support brows.

Construction of the incline conveyor has now started and is expected to be commissioned on January 17.

Coal of Africa said it remained confident it would secure long-term offtake agreements for the export thermal coal fraction produced from Mooiplaats.

The company has also prepared an initial letter of offer to Eskom for the lower quality thermal coal.

At the Vele project, Coal of Africa is now revising its mine and production scheduling to encompass underground and open cut sections after upgrading the resource to 721Mt.

The company said the revised schedule would offer better yields of coking coal, a reduction in mining costs and extended mine life beyond 2040.

The company is now in the process of choosing a mining contractor with six contractors being selected to submit proposals.

Coal of Africa shares were steady in morning trade at 78c on the Australian Securities Exchange.