Continental Coal welcomes Black Economic Empowerment partner

Continental Coal (ASX: CCC AIM: COOL) has completed an agreement with broad based Black Economic Empowerment company Sishen Iron Ore Company Community Development Trust (SIOC-cdt), which has become a 26% partner in the company's South African subsidiary.

Importantly, this attracts an initial A$17.1 million (ZAR140 million) investment which will be used to further fund the growth and development of Continental Coal’s thermal coal mining business in South Africa.

SIOC-cdt will invest a further $A9.1 million (ZAR75 million), which will satisfy the A$26.2 million (ZAR215 million) loan advances made by Continental Coal on behalf of its previous partner.

Continental Coal has formally executed Subscription and Shareholder Agreements under which SIOC-cdt has become the company’s new partner in South Africa.

Continental Coal chief executive officer Don Turvey said: “Our partnership with the Sishen Iron Ore Company Community Development Trust is a landmark agreement for us and will transform the company’s business activities and opportunities in South Africa.

“We welcome SIOC-cdt as our partners and believe together we will grow this business significantly in the coming years for all stakeholders.”

Following completion of the transaction, Continental Coal has invited SIOC-cdt to appoint one director to its board and further have two directors, including the chairmanship of the Board.

SIOC-cdt chairperson Connie Molusi said SIOC-cdt sees the investment in Continental Coal as key to the company’s involvement in participating in and developing key South African natural resources.

“SIOC-cdt is well placed in partnering Continental in its development of its attractive portfolio of thermal coal projects in South Africa to generate significant returns for our community members and Continental’s shareholders,” he said.

South African Operations

Vlakvarkfontein and Ferreira

Continental Coal currently has two operating mines, Vlakvarkfontein and Ferreira, producing approximately 2 million tonnes per annum of thermal coal for the export and domestic markets.

In 2011 and 2012 the company is set to commence development of two further thermal coal mines, putting it on target to achieve a run of mine production rate of 7 million tonnes per annum by the end of 2012-13.

Penumbra

Continental Coal continues to expand its coal interests in South Africa with the start of development of the Penumbra coal project.

The Penumbra Coal Mine will be the company’s third thermal coal mining operation in South Africa producing 500,000 tonnes per annum of a high quality export thermal coal product.

First production from the underground mining operation is forecast to begin in the June quarter of 2012 with full production targeted to be achieved in the third quarter of 2012.

Penumbra, which has an initial 10 year mine life with the possibility for extension, is located just 3 kilometres from Continental Coal’s producing Ferreira mine and the Delta Processing Operations.

De Wittekrans

The company’s De Wittekrans Coal Complex Project, which is set to be its largest new mine development in the coming years, comprises four projects De Wittekrans, Knapdaar, Vaalbank and Project X.

The project has a significant resource base and is located within a 10 kilometre radius and adjacent to major infrastructure.

A Bankable Feasibility Study was completed in September 2011 and peer review and initial optimisation studies have begun with preliminary results to be released to the market in the December quarter 2011.

Initial targeted production is 3.6 million tonnes per annum run of mine from conventional opencast and underground mining operations at De Wittekrans.