Continental Coal (ASX: CCC) is an established South African thermal coal producer, with a portfolio of producing and advanced coal projects located in South Africa's major coal fields. The company has two operating mines, Vlakvarkfontein and Ferreira, producing 2Mtpa of thermal coal for the export and domestic markets.
Continental Coal finalises Botswana exploration program, receives Kenya Mui Coal Basin tender documents
Continental Coal's (ASX: CCC) initial exploration drilling program for its Serowe and Kweneng thermal coal projects in Botswana has been finalised following receipt of a report from the company’s independent South African consulting geologists.
Tender documents have also been received from the Kenyan Ministry of Energy for 4 coal concession blocks in the Mui Coal Basin with submissions due in July 2011.
A 60 borehole drilling program will be completed in 2011 through a two phase exploration drilling program, to commence upon the appointment of Botswana drilling contractors.
Exploration drilling is to focus initially at Serowe with subsequent drilling to commence at Kweneng.
Jason Brewer, Continental’s executive director, said “we are extremely pleased to have finalised our planned initial exploration program for our Botswana prospecting licenses and to be in a position of being able to commence work incountry very shortly.
"In addition, having now received the tender documents from the Kenyan Ministry of Energy we are busy preparing our submission to position ourselves to secure one of the 4 exciting coal concession blocks available.”
Continental now has significant exploration upside in these highly prospective and strategically located coal regions, particularly coupled with export and domestic thermal coal sales from its two producing open cast mines in South Africa.
Continental currently has two operating mines at Vlakvarkfontein and Ferreira which produce 2 million tonnes per annum (Mtpa) of thermal coal.
In 2011 Continental is set to commence development of the Penumbra Coal Mine and complete a Bankable Feasibility Study on the De Wittekrans Coal Project.
Adding to the mix, Continental said it will announce an update on the Penumbra Coal Project development and funding plans shortly.
The Serowe and Kweneng projects are located immediately north of Botswana’s only producing coal mine, the Morupule Coal Mine and 25kms west of CIC Energy’s (TSE: ELC) Mmamabula Coal Project.
These licences in the name of Weldon Investments, a Botswanan incorporated company, are controlled by Continental Coal through its current 64.1% interest in Mashala Resources Ltd.
Phase 1 of the drilling is planned to commence shortly in June 2011, with Phase 2 scheduled to be completed by year end.
The exploratory program has been prepared with the aim of determining the potential for shallow to moderate depth coal which may be economically exploitable.
The program will also satisfy Continental's obligations under its prospecting rights to the Department of Geological Survey and also to determine which portions of the licenses to relinquish in 2012 as required under Botswana’s mineral legislation.
The Phase 1 exploratory drilling program is intended to enable an initial appraisal of the potential for coal deposits at moderate depths within both of the Projects, and to provide detailed information to determine the extent and nature of the Phase 2 drilling program.
Phase 2 drilling will be geared to delineating the extent and continuity of any potentially economic coal deposits detected by the wide-spaced boreholes from Phase 1.
Significantly, the company has concluded strategic off-take and funding agreements with EDF Trading for its export thermal coal production and recently signed a joint development agreement with KORES, Korea’s state mining and exploration company.
Continental last traded at $0.050, but US Investment Bank Madison Williams placed a $0.09 twelve month price target on May 16, indicating significant longer-term upside.
