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Kangala ups reserves

UNIVERSAL Coal has announced a 750,000 ton increase in the proven reserves within the initial Wolvenfontein open pit area at Kangala to 21.55 million tons.

Noel Dyson
Kangala ups reserves

The mine is on track to deliver first production in February.

With this upgrade, Kangala has sufficient reserves for nine years of operations.

This increase comes after a grade-control drilling program at Wolvenfontein in 2012 and subsequent assay analyses were completed.

It includes a 38% increase in the mid-seam proven reserves from 810,000t to 1.12Mt. Coal from the mid seam yields 69% export-quality coal sold to Exxaro as per the offtake agreement announced on July 22.

The increase also includes a 2% increase in the bottom seam proven reserves from 19.99Mt to 20.43Mt.

Coal from the bottom seam yields 90% coal meeting agreed South African power utility Eskom’s specifications.

Universal owns the prospecting rights to a number of adjacent properties. It aims to extend Kangala’s mine life to 20 years.

CEO Tony Weber said the increase in reserve in the export-quality mid seam would have significant positive impact on Kangala.

“Having recently commenced box-cut development, and offsite plant construction underway, the company remains on schedule for maiden production in February 2014,” he said.

Kangala is in the Witbank coal field in Mpumalanga province. It is Universal’s first operation.

The capital cost for the project is $A46.8 million ($US43.3m) and it is projected to supply an average $A15 million earnings before interest, tax, depreciation and amortisation per annum, with both costs and profit margins locked in.

Coal sales of 2.1Mt per annum are split between Eskom and a lesser 100,000tpa about 6000 kilocalorie coal to be supplied to the export thermal coal market via Universal’s Richard Bay Coal Terminal Quattro allocation.

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