25 May 2012

Environmental go-ahead for Coal of Africa

06/07/2011 Robert Tyerman

Coal of Africa (CZA) can restart its Vele coking coal project after authorisation from South Africa's Department of Environmental Affairs. The AIM-quoted company, based in Western Australia, stopped work at the project in the Republic's Limpopo region last August after the authorities alleged it had broken the country's environmental laws in an area next door to a UNESCO 'world heritage site'.

Now authorisation has been received, Coal of Africa, steered by chief executive officer John Wallington, says it aims to finish construction at Vele in six to nine months before building up to initial production of one million tonnes a year. The company, which is ramping up production at its Mooiplats thermal coal mine to a target two million tonnes a year, plans to start production at its other coking coal mine, Makhado, in 2013 and hopes Vekle and Makhado together will eventually manage to lift combined production from two million tonnes to 10 million tonnes of coking coal a year.

Growth Company Investor first recommended Coal of Africa shares at 14p in 2006 before suggesting partial profit taking at 217p two years later. Various setbacks sent the price plunging to 65p during the past 12 months, after a £55 million funding at 110p in June 2010.

Vele's environmental authorisation has lifted the shares 15 per cent this morning to 89.75p, valuing the company at £477 million. They should rally further if planned progress is achieved.

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Tags: AIM market, Coking coal, South Africa, Unesco, Vele

Sector: Mining

Companies: Coal of Africa

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