Johannesburg, South Africa --- MININGREVIEW.COM --- 04 April 2011 - Australian based and JSE and ASX-listed coal development company Coal of Africa Limited (CoAL) has risen the most in almost five months in Johannesburg trading as its controversial Vele project gained a water licence, moving the company closer to resuming output halted in August.
The producer jumped as much as 14%, the biggest gain since 12 November. It had halted construction work last August after the environment department had declared that the site had broken rules. In May the department had voiced “significant concerns” over the mine, about 27km from the Mapungubwe Hill ruins "’ a United Nations World Heritage site, and once southern Africa’s biggest settlement.
“The award of the license takes Vele a step closer to becoming a fully operating mine,” Heidi Sternberg, an analyst at Nedcor Securities, said by phone from Johannesburg.
CoAL, which applied for the licence 17 months ago, plans to produce 5Mtpa of coking coal at Vele, some of which will be used to fire blast furnaces at ArcelorMittal’s South African steel mills. A “rectification process” aimed at lifting the environment department’s compliance notice continues, Coal of Africa said today.
“We suspect that this is now only a matter of time,” said Charles Kernot, an analyst at Evolution Securities Limited, in a note. Kernot recommends investors buy the stock.
“Coal of Africa welcomes the decision to grant the licence. The company is acutely aware of the sensitivity of the area and the significant responsibilities the approval brings,” CEO John Wallington said in a statement.