Coal of Africa Ltd (CZA) – Results for the six months ended 31 December 2008

Coal of Africa Ltd (CZA) – Results for the six months ended 31 December 2008

Results for the six months ended 31 December 2008

• Cash balance at the end of December 2008 was A$204million
• Resource upgrade on Makhado hard coking coal project from 713 million to 1.335 billion gross in situ tonnes.
• Resource upgrade on Vele coking coal project from 441 million to 721 million gross in situ tonnes.
• Company’s coal resources totalled 2.2 billion gross in situ tonnes at the end of December 2008, with approximately 95% of the resources located in the higher value coking coal projects.
• Delivery and commissioning of the first two continuous miners at the Mooiplaats thermal coal project, with development of the associated infrastructure on schedule.
• Production of first run of mine coal at the Mooiplaats Project.
• Completion of negotiations with Transnet Freight Rail securing rail allocation for the transport of coal from the Company’s Mooiplaats Project.
• Lodging of a New Order Mining Right Application with the Department of Minerals and Energy for the Vele Project.
• Revision of the Vele Project mining plan to include open cast as well as underground sections thereby improving the coking coal yield, significantly reducing mining costs and extending the life of the mine.
• Memorandum of Understanding signed by CoAL and Rio Tinto to swap certain prospecting rights and enter into a Joint Venture on other prospecting rights, all located in and around CoAL’s Makhado Project.
• Long term port allocation secured at the Richards Bay and Maputo ports for the export of coal.
• Tenders submitted jointly with Independent Power Producers for the base load power supply programme for both the Vele and Makhado Projects, were unconditionally pre-qualified by Eskom.
• Approval from the Australian Foreign Investment Review Board granted to the Company’s Black Economic Empowerment  partner to increase its stake beyond 15% to 17.3%, raising an additional GBP15.6 million.
• Extension of BEE agreement to 30 April 2009 ensuring the Company complies with South African legislative requirements for mining companies.

Post period highlights

• Appointment of Morgan Stanley & Co. International Limited and Evolution Securities Limited as Joint Brokers to the Company. Evolution Securities also appointed as Nominated Advisor to CoAL.
• Agreement reached with TFR to transport 1 million tonnes per annum to the Matola dry bulk terminal in Maputo, Mozambique.
• Agreement to provide funding to expand the Matola Terminal, securing an additional 2 mtpa port allocation with an anticipated completion date of 1 August 2010.
• Appointment of Professor Ntshengedzeni Alfred Nevhutanda as Executive Director of CoAL.
• Selection of MCC Contracts, a division of Eqstra Holdings Limited as preferred partner for the Vele Project opencast mining operations.

The Company announced that its first mine will produce saleable export quality thermal coal in the new financial year (H1 2009) and plans to have a second coking coal project in production by the end of the year are progressing according to schedule.

The Company has secured sufficient port and rail allocation, guaranteeing its ability to transport and export its mined product thereby removing the significant infrastructure challenges faced by emerging bulk commodity mining companies. Despite tough global conditions, CoAL continues to have a low cost base and is well positioned to develop its current projects, as well as being able to take advantage of potential future prospects that may arise.

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