Universal Coal, the ASX-listed coal junior in South Africa is on track to elevate its status from single mine operator to multi-mine coal producer before year-end following completion of its acquisition of the Witbank coal fields-based New Clydesdale Colliery (NCC).

Universal Coal assumed official ownership of NCC upon satisfying the remaining conditions precedent to completion of the transaction, including payment of the final instalment of the purchase price to the previous owner, Exxaro Coal Mpumalanga, following the grant of Ministerial approval in terms of Section 11 last month.

The company will now focus on recommissioning NCC’s existing processing facilities for Phase-1 open-cut development, which are expected to process up to 2 Mtpa ROM (phase 1) of hi-grade domestic thermal and low-phosphorous metallurgical coal, which it is expected will be supplied primarily to the South African market.

A long-term coal sales agreement with South African power utility Eskom to supply up to 1.2 Mtpa hi-grade domestic thermal coal from NCC is nearing settlement with consensus already reached on key terms, including coal quality, quantity and key commercial terms.

“We are delighted to officially acquire NCC, which marks a major step forward on our path to become a leading mid-tier, multi-product coal producer,” says Universal Coal’s CEO Tony Weber.

“Our first operation, Kangala, continues to exceed expectations. It achieved record sales in July and is delivering strong cash flow throughout 2015, while production has increased. Importantly, wage agreements have now been secured with employees of Kangala’s mining contractor and plant processing contractor, ensuring labour stability through to 2018.”

“NCC provides the company with its second, long-term, significant coal producing asset within the span of two years. We look forward to bringing the operation on stream with first production planned for later in 2015. Once steady-state operations are achieved, we anticipate that the additional tonnage from NCC will contribute significantly in improving the existing level of cash generation and earnings for the group.”

All funding for first phase development of NCC has been secured.

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