CONTINENTAL COAL

COMPANY PROFILE

2013

Mining new depths

Continental Coal Limited (Conti Coal) is a South African producer of thermal coal, with advanced projects located throughout the major coal fields in South Africa. Currently focussing operations on three mines, Vlarkvarfontein, Ferreira and Penumbra, the company will commence development of a fourth mine imminently, with the addition of Dewittekrans set to help Continental achieve a ROM production rate of 10Mtpa by the end of 2015.

Of its three mines currently in operation, last year proved a particularly profitable year for Continental Coal’s Vlarkvarfontein site, an operation which commenced back in 2010, providing around 1.4 million tonnes of thermal coal to be directed at the export and domestic markets.

Neither is this the result of a prohibitively expensive operation for the producer; Don Turvey, Conti Coal CEO, dubs the site a “very productive and, also, low cost set up. The mine has a life spanning ten years already, and we’re still on track with that to be in there until around 2020.” Turvey recognises in turn the importance of the Vlarkvarfontein mine in terms of the company’s

progression, unequivocal in his estimation of its stature. “From a value point of view, that’s where we do the biggest volumes.”

Clearly, the leader in the Conti Coal trio of mines, Vlarkvarfontein, is nonetheless backed up by vital operations in the producer’s two accompanying sites, Ferreira and Penumbra. The former is, similarly, an open-cast mine, although differs from the more valuable site in the manner in which its coal is mined.

Turvey details what these differing modes of operation entail: “At Vlarkvarfontein we mine two seams, the number two seam and the number four seam, and at Ferreira we mine three seams, the B Lower seam, the C Upper, and the C Lower seam. It’s a different coal region, which explains the different seam names, and is a high separation mine – of about eight to one.”

This is a high quality coal, which then follows an intricate path from extraction to exportation. “The high quality product is then taken to our coal processing facility, the Delta Plant, which is about three kilometres away from the mine and is where we process the coal. We then have a siding which is capable of taking the

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Mining new depths

For Continental Coal, the only prospects brighter than its three currently burgeoning mines are the wealth of new developments it has ready for exploration in the imminent future. Don Turvey details the many aspects of its operations, and how the company is looking to build on its current success through the new projects on which it is currently focussing.

jumbo trains, right next to the coal processing facility, which makes it that much easier to load and transport ready for export.”

The latter of these two supporting mines, Penumbra, is a project whose construction was started in September 2011, and where production of coal began in December 2012. “We finished the shaft, and we were ready to produce coal and in February we took down the second continuous mining section.”

As Turvey explains, this is one operation where Conti Coal is entirely self-reliant; “We don’t use contractors at Penumbra – it is all owner-operated, meaning we bought the machines, and it is all a product of our own machines and people. The project is almost complete; we still need to do the up-cast intervention shaft and then we’ll be completely there with it.”

That said, this is not a region in which the company is lagging with its work: “we are already operating there. We managed to secure funding from ABSA there, they were key in getting the project going. We’ve gone way beyond the original figure of 50,000 tonnes per month there and now we’re looking at a target rate of about

63,000 tonnes each month. “Our build up has been slower than anticipated, due to

a couple of key hiccups along the way – roof conditions, namely, and also methane that we’ve picked up in some parts of the seam, although we can now press on in pursuit of these target figures.”

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The coal that Continental extracts and processes can be found in use in operations across the world, although a major arm of its business is the distribution it has throughout South Africa. “Some of our coal goes to Richard’s Bay and directly to the international markets” says Turvey, “and while EDF takes away some of our coal, we are also serving to other major parties in South Africa. Most of the coal both from ourselves and South Africa in general goes into the East.”

The company deals in significant numbers in all of its areas of operation: “Alongside the ever-growing target figure at the Penumbra site, at Vlarkvarfontein Turvey sets out a ‘budget’ figure of, “around 110,000 tonnes, but we regularly exceed that, often up to 130,000 tonnes per month.” The more diminutive returns of Ferreira still equate to a figure of roughly 47,000 tonnes per month, “sometimes as much as 55,000 tonnes each month.”

The procedure for developing a site through from greenfield status to a fully-fledged productional facility is not a quick task, as Turvey points out: “With the infrastructure that needs to be set up each time, in some cases this can take three years and in others it can be as long as five years. There are also many variables which can prolong this – regulatory approvals, getting access to the areas, for example, but that is the general range.”

Among the company’s numerous current development

projects, all of which sit at different levels of approval, it is the Dewittekrans site that is arguably nearest completion, with the possibility of mining within the next three to six months. Vlakplaats, by contrast, “is still very early phase exploration, so that will take quite some time to see if it is economical and so on, so there is still some work to do here” says Turvey, although exploration and pre-feasibility is nonetheless underway here too.

Turvey succinctly rounds up how these diverse areas of exploration and development continue to set Conti Coal apart from others in the field and look set to ensure a bright future for the company. “I think when you look at any coal mining company, obviously you get what we call ‘one project companies’ – they have one project and that’s all that they focus on.

“With a company like us who has at any time multiple projects in progress, that gives you a continual pipeline, and therefore as these projects become more mature it creates a great opportunity to bring them into operation.”

Ever aware of Conti Coal’s wider social responsibility, Turvey describes what he labels the company’s ‘social license to operate.’ “Working within your community is absolutely key to ensuring the sustainability of your operation,” states Turvey, and typical of this is the company’s job creation project at Vlarkvarfontein; a Lavender Farm, which uses many hectares of land

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to improve water supply and power supply, which although in the early stages of development, will, “ultimately create a sustainable agricultural venture which will create opportunities for the local community, way beyond the existence of the mine. We are constantly looking to create a pool of potential training, educational and recruitment opportunities.”.“Working within your community is absolutely key to ensuring the sustainability of your operation”

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DIGBY WELLS COAL CLIENTS FROM JUNIOR TO TIER 1 – WE UNDERSTAND OUR CLIENT’S NEEDS:

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• BHP BILLITON – Various ESIAs

• EXXARO – Thabametsi

• CIC ENERGY CORP. – Mmamabula Project

• NORTHERN COAL – Jaglust, Mimosa Colliery

• RESOURCE GENERATION – Boikarabelo Project

• UNIVERSAL COAL – Kangala, Brakfontein, Roodekop: ESIAs, IWULA and NEMWA

• XSTRATA COAL SOUTH AFRICA – Various ESIAs, Specialist Services, Annual Closure Update

• AND MANY MORE ...Tel: +27 11 789 9495 • Fax: +27 11 789 9498

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