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Vele coal production poised to start

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Johannesburg, South Africa — MININGREVIEW.COM — 26 October 2009 – Emerging coal development and production company Coal of Africa Limited (CoAL) – listed on the AIM, the Australian Securities Exchange and the JSE – says it expects to start production at its Vele coking coal project in South Africa by April next year if the government grants it a licence as expected this quarter.

Vele will initially produce up to 1 million tonnes of coal per year, to be ramped up to 5 million tonnes, and will supply steel maker ArcelorMittal SA and the export market.

“The company expects the granting of a New Order Mining Right for its Vele coking coal project before the end of 2009 and production is expected to follow within four months of receiving the required legislative approval,” managing director Simon Farrell said in a statement.

CoAL said it had railed and sold first coal from its Mooiplaats thermal coal project, also in South Africa, with production in September reaching 30 000 tonnes of run of mine. The miner has said it expected Mooiplaats to reach an annual run of mine production of 1.7 million tonnes by 2010, ramping up to 3.2 million tonnes by 2014.

Coal from Mooiplaats is expected to be railed to the Matola Terminal in Maputo, Mozambique, from where shipping is expected to commence by the end of this year.

CoAL said it had signed an off-take agreement with Traxys, a global mineral marketing company, for 35% of the export quality thermal coal from Mooiplaats. The company said it had agreed the terms for a further 35% off-take with another global trader, with an agreement due by end of 2009.

The company’s export allocation at the port stands at 1 million tonnes per annum, to be expanded to 3 million tonnes by late 2010, and with the potential to reach 13 million tonnes following an expansion of the export terminal.