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MINING | Universal Coal | ASX


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Taking its thermal coal production to the next level


MINING | Universal Coal | ASX

Universal Coal has passed a number of significant milestones since RGN last touched base with the ASX-listed miner towards the end of 2016. At that point, the company had started underground operations at its 2nd South African mine – the New Clydesdale Colliery (NCC), which joined its existing Kangala facility in the Witbank coalfield of Mpumalanga province. By January 2017, Universal commenced open pit production at NCC before reaching nameplate capacity in the second half of the year. This milestone was sandwiched between the signing of a supply deal with Eskom and the pay out of its maiden shareholder dividend in October 2017, a clear illustration of the progress made by the company last year. The end of 2016 was marked by the finalising of a long-term coal supply agreement with Eskom, which provided a solid platform for Universal to plough ahead with the open pit development at NCC. Under the deal, Universal will supply South Africa’s biggest power utility company with 1.2 million tonnes (Mt) of coal per year for seven years, primarily from the NCC deposit, with the first batch successfully delivered to Eskom in Q2 2017.


Resource Global Network Universal already has in place an eight-year supply deal with Eskom for output from the Kangala mine, which was signed back in March 2013, however it was crucial for the company to seal a similar agreement that established a dependable buyer for the coal produced at NCC.

Nameplate at NCC Just two months after the Eskom deal was announced, the open pit section of NCC commenced production. Progress continued at a rapid rate over the subsequent months until nameplate capacity was reached in the third quarter of the calendar year. “On the underground section we hit the tonnage [targets] pretty early on in 2016. The open pit has obviously had a significantly greater impact on the total output figures,” says CEO Tony Weber. “We are now hitting those tonnages that we were looking at, which is North of 200,000 tonnes a month at the open pit. Effectively between the underground and the open pit we are doing roughly 300,000 tonnes a month, which has achieved nameplate capacity.” In fact, at the current annualised run rate of close to 2Mt, the colliery is exceeding the tonnages required by Universal’s customers, with 650,000 tonnes heading to the export market annually and 1.2Mt going to Eskom. The prospect of surplus saleable coal from NCC is a welcome one for the company and


MINING | Universal Coal | ASX

another sign of progression at the mine

sales annualised. This figure represents a

which only reached steady state production

significant degree of growth over a short time

in H2 2017.

according to Weber.

Taking into account the Kangala colliery,

This impressive annualised output level is not

which began producing run-of-mine coal

just a product of the open pit facility at NCC

in April 2014, the company’s current

coming online, but also thanks to Kangala

total run rate stands at around 4.5Mt of

running at 12% above nameplate – another


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MINING | Universal Coal | ASX

remarkable achievement of a stellar 12

opportunity and is another really good

months.

success story.”

“At Kangala we are running at about 200,000

Multi-mine production

a month at the moment, which is annualised

The combined achievements at Kangala

at 2.5Mt,” reports Weber. “That’s pretty

and NCC over the last year represents the

much the limit of what we can squeeze it

realisation of a long-term vision for Weber

to in its present state, although we recently

and Universal of achieving multi-mine

bought 80% of the adjoining Eloff block. This

production, but the company is not resting

acquisition gives us an exponential expansion

on its laurels.


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“These two mines are now fully fledged and

opportunities in terms of acquisitions.

up and running, so we have achieved multimine production, but obviously this is not

“So we are looking at further expansion, but

where we intend to stop.

having said that we also paid our maiden dividend and I think that’s a big ticket item for

“There are opportunities to expand,

2017.

especially at Kangala and opportunities to develop further operations like the Eloff

“We paid a 1 cent dividend and declared

project and also additional brownfields

that it’s over a 6% return on equity from an


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MINING | Universal Coal | ASX

investor point of view and we don’t intend

doesn’t stop here for Universal, with another

this to be our last dividend in any shape or

significant ramp up in its production

form. We want to be regular payers giving

trajectory targeted over the course of 2018-

something back to our shareholders but also

19.

continuing to grow the company.” As already highlighted, the hard work

Brakfontein and Eloff The company is ready to proceed on its third


Resource Global Network

project, the Brakfontein coal mine in Delmas, “Having got all the permitting in pace at Mpumalanga, having received full licencing

Brakfontein, it’s really now about getting

for the development.

marketing agreements in place for the coal,” Weber stresses.

Brakfontein hosts a JORC 2012 mineral resource of 75.8Mt inclusive of a proven ore

“We have looked at doing this early next

reserve of 9.1Mt.

financial year.”


MINING | Universal Coal | ASX

Australian Business Network

113


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First production from Brakfontein is set to

increased tonnage projections for 2018-19,

be achieved in 2018, bringing to fruition a

along with increased output from Kangala.

project which has been in the pipeline since Q4 2014 and which has guided Universal’s

The Eloff acquisition presents Universal


MINING | Universal Coal | ASX

SSMS_Quarter advert_121x95mm_Sept 2017_Final.pdf

1

2017/09/19

7:53 AM

with a significant expansion opportunity on one of its existing properties, owing to the fact that it lies adjacent to Kangala. With infrastructure already in place, the brownfields expansion will provide a low cost pathway to the long-term

C

development of Kangala, as even on

M

Y

current production rates there is life

CM

well in excess of 40 years on the historic

MY

resources at Eloff, says Weber.

CY

CMY

K

“There is substantial upside potential when you do these kinds of expansions, in terms of bringing value back to the company and we will continue to develop along those lines, creating nodal points excellence in execution

and expanding on the back of those.�


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Over the next six months Universal will

value accretive growth, while we continue to

look to continue delivering and exceeding

look after all stakeholders, including in the

its promises, chiefly aiming to maintain

communities.

production levels at the 4.5Mt mark in order to satisfy its contractual agreements with

“We often don’t state this, but we plough

Eskom and the export market.

significantly back into the community at Kangala. It’s not just looking after

“Overall, the standout point for us is that

shareholders and employees but looking

we’ve delivered on what we said we were

after all stakeholders. It’s about all the people

going to deliver. We said we were going to

around you.”

become a multi-mine producer and after that we said we would reward shareholders and we’ve done both of those,” Weber assets. “It’s not just about seeking growth, but finding

b j


Published by Anderson Murray Media Ltd

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RGN | Universal Coal  

Taking its thermal coal production to the next level

RGN | Universal Coal  

Taking its thermal coal production to the next level