HomeCoalUniversal Coal secures ownership of NCC & works to double coal production

Universal Coal secures ownership of NCC & works to double coal production

ASX-listed coal junior Universal Coal has secured Ministerial approval in terms of Section 11 of the MPRDA for the transfer of ownership of the New Clydesdale colliery (NCC) Mining Right from Exxaro.

This will allow re-commissioning of the NCC mine to proceed. NCC, which is near eMalahleni (Witbank), will be Universal Coal’s second operation. Universal’s first operating mine – Kangala colliery, currently produces ~2 Mt of saleable coal per annum.

The first phase of the NCC project involves the development of an open cast operation on Roodekop, with the re-commissioning of the NCC processing facilities to meet the demand of the initial tonnage throughput. Phase one is fully funded from existing cash reserves and an Investec facility.

On-site operations are scheduled to commence later this year. At full capacity, the NCC mine will produce 2 Mt of ROM coal per annum for high-end domestic markets. A long-term coal sales agreement (CSA) is currently being negotiated with both power and metallurgical off-takers for the use of coal from NCC. NCC has reserves of 40.5 Mt and is expected to have a mine life in excess of 20 years.

On 22 June 2015, Universal announced a senior secured debt finance facility of AUS$55 million (R525 million) with Investec Bank. This facility will enable Universal to fund the final phase of capital development at NCC and to bring the NCC mine into production.

“We have transitioned from an explorer to a 2.8 Mtpa ROM coal producer in only four years.  With the commissioning of NCC we anticipate that we will be able to double our output and our earnings by Q4, 2016. With development of NCC, Universal Coal is well on its way to meeting its strategic objective of becoming a mid-tier lower-quartile multi-mine, multi-product coal producer,” says chief executive Tony Weber.

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