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Universal Coal Plc to cash in on rising coal prices with second mine

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Universal Coal Plc (ASX:UNV) remains on schedule for the re-commissioning of the New Clydesdale Colliery (NCC) in South Africa, with the first coal expected in September 2016.

NCC is the company’s second operation and enhances Universal’s position as a multi-mine coal producer with an increased exposure to the improving export thermal coal market.

Universal’s first project, Kangala Mine in South Africa, achieved record run-of-mine (ROM) production of 3.2 million tonnes in FY2016.

Record sales of 2.04 million tonnes helped the company generate unaudited group EBITDA of A$17 million in FY2016, up 16% from FY2015.

The second project, NCC, located in South Africa's premier coal region in the Witbank basin hosts a JORC 2012 mineral resource of 130.4 million tonnes, sufficient for over twenty years of operation.

NCC will initially commence with 900,000 tonnes per annum ROM from the underground operation placed on care and maintenance by the previous owner, producing export quality thermal coal.

A second-phase open pit development will commence upon securing an offtake agreement, adding a further 2 million tonnes per annum ROM of primarily thermal coal.

Universal’s CEO Tony Weber has indicated that the company will be in a good position to consider shareholder returns, including dividends, once the second phase of NCC is up and running in a steady state.

Interestingly, less than a year after the coal industry was declared to be in terminal decline, cargo prices for Australian thermal coal have soared over 35% since mid-June to almost $US70 a tonne.

 

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ASX:UNV
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