Universal signs supply deal with Eskom

PERTH (miningweekly.com) – Coal miner Universal Coal has signed a coal supply agreement with South African State-owned electricity provider Eskom that will enable openpit production from the New Clydesdale colliery (NCC), near Middelburg, in Mpumalanga, to start.

Universal will supply Eskom with 1.2-million tonnes a year of coal from the NCC, over a period of seven years. The first coal will be delivered in the second quarter of the company's 2017 financial year.

Phase 1 underground mining at the NCC Diepspruit shaft started in September, and will deliver 0.9-million tonnes a year run-of-mine (RoM) export-quality thermal coal. The Phase 2 openpit operation will add a further two-million tonnes a year RoM production, taking Universal’s production profile to over six-million tonnes a year, over two operations.

NCC is located about 70 km east of Universal's first mine, Kangala.

“The coal sales agreement finally delivers on the full development of NCC as the second operation of Universal Coal, an important step in the development of becoming a midtier mining company,” said CEO Tony Weber.

“Upon achieving steady-state at NCC, we will be producing saleable coal at a rate in excess of four-million tonnes a year, with excellent prospects for further organic growth.”

Trollope  Mining  Services  has  been  nominated  as  the  preferred  contractor for  the openpit boxcut development, mining  operations and  infrastructure development. STA Coal Mining Company is responsible for underground mining.

Meanwhile, Universal has requested an extension to the date of delivery of the conditions precedent for its NCC debt facility, following a delay in securing a long-term coal sales agreement and the shift in phased development, switching first to underground and then to openpit mining.

The company said that it was reviewing all options available to finance the development, including reverting back to Investec Bank and approaching other interested institutions.