🕐21.09.10 - 09:54 Uhr

CONTINENTAL POISED TO BECOME MID-TIER SOUTH AFRICAN COAL PRODUCER AS KEY MASHALA AGREEMENTS EXECUTED



Continental Coal Limited (CCC) ASX Announcement
21 September 2010 VLAKVARKFONTEIN PRODUCTION UPDATE EXCEEDS TARGETED PRODUCTION OF 100,000 TONNES FOR JULY Key Points: - Production of 101,899 tonnes for July exceeds 100,000 tonnes monthly target - Target achieved within two months from first coal production blast on May 27 - Further off-take contracts signed for sales of domestic thermal coal - Crushing and screening contractor mobilised to site and now fully operational - Appointment of highly experienced site representative South African focused coal mining company Continental Coal Limited (ASX: CCC) ("Continental" or "the Company") is pleased to provide this update on mining activities at its Vlakvarkfontein coal mine in South Africa, where in only the second full month of operations it has already exceeded its targeted monthly production of 100,000 tonnes of thermal coal. The achievement of the targeted production at Vlakvarkfontein comes approximately two months after production commenced at the Companys first mine. "To have reached our production target so soon after our first coal production blast on May 27th is testament to the planning and operational expertise of our mining contractor, Trollope Mining Services, our key consultants and our management" said Continental Coal CEO, Mr Don Turvey. "With mining activities now focussed on both the No.4 and No.2 coal seams we are confident that sustained monthly coal production levels of 100,000 tonnes can be achieved in the December 2010 quarter and beyond.

This gives Continental Coal a strong operating and financial platform from which we can advance our other development plans," Mr Turvey added. Appointment of Crushing and Screening Contractor In August, the Company appointed W-Carriers Contracting ("WCC") under a 3 year contract to conduct crushing, screening and stockpiling of 100,000 tonnes per month of the run-of-mine coal to produce a -50mm coal product that will be sold free on truck and at mine gate.

With these facilities now established on site and able to produce a crushed and screened product, the Company is now well placed to sell to a broader domestic market and attract better gross margins compared with producing a raw run of mine coal product.

In addition WCC will also be responsible for the loading of the coal trucks that are taking delivery of the coal under recently executed coal off-take agreements. At the end of August all site works were completed by WCC and crushing and screening activities are currently achieving their targeted hourly rates. Conclusion of Domestic Off-take Agreements The Company is also pleased to advise that since first coal production commenced in May 2010 it has successfully concluded three separate off-take contracts for the sale of its production of a domestic quality thermal coal from Vlakvarkfontein.

These contracts are generally short term contracts and extend for periods of no more than six month.

Contracts are for sale on a free-on-truck basis at the mine gate for a crushed and screened product.

The contracts are with domestic end users and nearby mining operations. Furthermore with mining activities at Vlakvarkfontein now taking place on both the 4 seam and 2 seam, the Company anticipates that longer term contracts will likely be entered into in the coming months, as detailed results of the 2 seam coal qualities are received and a final blended 4 and 2 seam coal product is determined and the associated pricing is finalised.
"With these preliminary off-take contracts already established, the Company is well positioned to ensure 100% of our forecast production at Vlakvarkfontein is sold into the domestic market at attractive coal prices which provide free cashflow to support our other mine development activities," Mr Turvey said. Key Site Appointment and Completion of Construction for Key Project Infrastructure In August the Company appointed experienced mining engineer and mine manager, Mr Hilton Papenfus as its representative at Vlakvarkfontein.

Mr. Hilton Papenfus has over 15 years experience and was most recently General Manager at the nearby Kendal Coal Mine, operated by TSX listed Homeland Energy. The Company is pleased to advise that in recent months, it has also completed a wide range of construction activities on key infrastructure items that will further underpin its longer-term mining operations at Vlakvarkfontein. In the month of August, the Company completed the upgrade of the rail level crossing close to the Arbor rail siding located north of the Vlakvarkfontein open pit as well as other associated infrastructure to support the transport of coal from our site.

Completion of these works has enabled the Company to increase coal haulage from the open pit and manage the increased number of coal trucks taking delivery of coal sales at mine gate.
To download a full copy of the ASX announcement please click on this link: http://esp.gewru.com/download/files/12414/1245261/21092010%20Production%20exceeeds%20100_000%20tonnes%20for%20July.pdf For further information: Peter Landau, Non Executive Director, Continental Coal Limited Ph: 08 9488 5220 David Tasker, Professional Public Relations, Ph: 08 9388 0944 / 0433 112 936 Em:
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