Coal Of Africa Vele Production Suspension
Edison | Jan 23, 2013 08:30AM ET
On 22 January 2013, Coal of Africa announced that it was forced to stop production at its major opencast Vele operation due to the flooding caused by the severe rainfalls in the Limpopo province. The company expects a week of down time, but would not rule out operations commencing earlier if weather conditions have improved. At this stage, the production implications are likely to be minimal as the company will run down its saleable inventory, which is close to Vele’s weekly output.
Coal of Africa announced that it was forced to stop production at its opencast Vele operation due to the mine site flooding. The flooding was caused by heavy rains in the Limpopo province, with an estimated 500mm of rainfall in the past five days compared to the normal annual rainfall of just 450mm. The company states that the downtime could take up to seven days, but, as the rain has stopped, it does not rule out limited operations commencing in the next few days. At this stage, it appears that the production impact from the disruption is likely to be minimal as the operation has 5.5kt in saleable inventory. This compares to the Vele’s current weekly production run rate of 7.7kt of thermal coal.
In other news, Coal of Africa reported that its new strategic partner Beijing Houhua Energy Resources (BHE) obtained all necessary approvals to proceed with the final $80m tranche of the agreed $100m equity package. The initial $20m payment was advanced to the company in late 2012. The remaining $80m conditional payment is subject to Coal of Africa shareholder approval, which is expected to be received at the upcoming extraordinary shareholder meeting to be held on 25 January 2013.
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