Paul Miller,
Managing Director,
Keaton Energy
 
Johannesburg, South Africa — MININGREVIEW.COM — 26 November 2009 – Coal exploration and development company Keaton Energy Holdings Limited (Keaton Energy) is to proceed with the first phase of development of its Vanggatfontein coal mine “’ previously known as the Delmas Project “’ near Delmas, in the Mpumalanga province.

The company announced the go-ahead with the release of its interim results for the six months ended 30 September 2009. “The development plan for Vanggatfontein will be phased, to take into account market conditions and commercial negotiations,” said Keaton Energy managing director Paul Miller.

“Phase 1 “’ comprising 3.4 million tonnes of 5 seam metallurgical coal and a 50 000 tonnes per month processing plant “’ is planned to produce 30 000 tonnes per month to take advantage of premium pricing in the domestic market “’ a consequence of the recent return to service of smelters by local ferro-alloy producers in response to an anticipated upturn in international demand.”

Vanggatfontein Phase 1 “’ at an indicated capital cost of R130 million “’ will be funded from Keaton Energy’s existing cash resource of R366 million, the bulk of which was raised prior to its JSE Limited listing in April 2008.

“While the development of Phase 1 will be the company’s focus for the next six months,” said Miller, “a decision is also likely during this time on Phase 2.” This will produce thermal coal and is dependent on the receipt of a suitable off-take agreement with Eskom. Keaton Energy has responded to the power utility’s recent request for proposals process to supply domestic power station coal, and is awaiting a response.

The Department of Mineral Resources (DMR) granted a 20-year mining right over Vanggatfontein in June 2009. SNC-Lavalin South Africa (Pty) Ltd has been selected as the overall engineering, procurement and construction management contractor for the project, DRA Mineral Projects (Pty) Ltd as the plant contractor, and Epoch Resources (Pty) Ltd for the design and construction of the residue disposal facility.

Appointment of a mining contractor is expected shortly. “Two months of detailed engineering design and finalisation of contracts for mine and plant construction are in progress with a view to site establishment early in 2010. First production in Q3 of 2010 should be well-timed for the expected market upswing,” Miller said.

Vanggatfontein has a SAMREC-compliant coal reserve of 25.9Mt, forming part of a 163.4Mt coal resource. The 22.5Mt balance of its coal reserve comprises thermal coal.