First coal sales went to South Africa’s leading power utility, ESKOM.
Under the terms of the original coal sales agreement, Universal Coal will provide ESKOM with sales from Kangala for the next 8 years, with an extension in place for 16 years.
Remaining production will target the more lucrative export markets, via a 100,000-tons-per-annum offtake agreement with leading South African coal producer Exxaro Resources.
The first export sales are predicted to begin in July.
Universal has already secured export allocation through Richards Bay coal terminal.
Universal Coal’s CEO Tony Weber said, “We are delighted to have now delivered first coal sales to schedule, and look forward to generating steady and strong cash flow from Kangala for the decade to come.
“We are currently installing the DMS washing circuit on site that will enable us to commence processing export quality coal.”
Kangala is now well on its way to its nameplate capacity, expected by Q3 2014.
Cash flow from Kangala will go towards funding the development of the company’s next operation, the combined New Clydesdale Colliery and Roodekop project.