Universal Coal has secured a majority interest in the Brakfontein Thermal Coal Project in South Africa which could allow accelerated development of the project, with a Feasibility Study and regulatory applications well advanced.

The close proximity of Brakfontein to Universal’s proposed Kangala Mine presents the company with the option of developing off the shared Kangala infrastructure, which in turn will result in lower development capital and a corresponding increase in the economy of scale of the potential larger project.

The increase in stake follows a mutual amendment to the acquisition and option agreement, entered into earlier this month between Universal Coal and Energy Holdings South Africa - a wholly owned subsidiary of Universal Coal Plc, Unity Rocks Mining and Universal Coal Development III.

The Brakfontein Project hosts a JORC thermal coal Resource of 87.6 million tonnes, of which over 80%, or 70.5 million tonnes, is in the high confidence Measured category.

Mr Tony Weber CEO said that “We are delighted to have secured management control over the Brakfontein Project earlier than anticipated. Development of the project will allow Universal Coal to compete in the higher value thermal markets, with the Feasibility Study and regulatory applications aimed at moving this asset closer to production progressing well.”

Universal is moving closer to cash flows with the execution of binding term sheet with South African power utility Eskom for the supply of about 2 million tonnes of coal per annum.

Development of the Kangala thermal coal mine about 65 kilometres east of Johannesburg is expected to start in the second half of this year with first saleable coal delivered a year later.

The supply agreement has an initial term of eight years with an option for another eight year renewal once the resource base increases through Universal’s adjacent property holdings.

Source - Proactive Investors

(www.coalguru.com)