[miningmx.com] — KEATON Energy’s main priority is to deliver both phases of the Vanggatfontein project as planned next year, according to MD Paul Miller .
“We have a huge opportunity at Vanggatfontein, which is a big project for a small company,’ he said.
Development of the project has been fast-tracked since Keaton obtained access to the site near Delmas in Mpumalanga, after delays caused by extended negotiations with the landowners.
The first metallurgical coal from the No 5 seam operation at the mine, which is being developed as Phase One, was delivered to the market on December 3.
Miller said production will continue to increase until the end of January, when full-scale plant operation at a rate of 50,000 tonnes per month (t/m) run-of-mine should be reached.
Phase Two will develop the two and four seams at the mine to produce a total of 16.5 million tonnes of coal to be supplied to Eskom in terms of a seven-year supply contract.
Production in terms of Phase Two is expected to reach 200,000t/m by July next year.
At end-September, Keaton had R190m in available cash. The company subsequently completed negotiations with Nedbank Capital for the provision of R255m in project finance to fund Phase Two to completion.
Miller said: “With Vanggatfontein Phase One scheduled to reach full production early in the new year, the group is well placed to benefit from expected continued improvement in demand – and thus pricing – for high quality metallurgical coal in the domestic market.
“As Phase One beds down to steady state, our focus will shift increasingly to the commissioning of Phase Two and servicing our long-term supply contract with Eskom.
“Simultaneously, we expect to take our Sterkfontein project to the next level – feasibility – with entry to a recovering export market envisaged in the longer term.’
Capital expenditure estimates for the development of Sterkfontein are expected to be drawn up by the second quarter of 2012.
Keaton shares have been trading under a cautionary notice since October 7. Miller declined to provide any further clarification on this.
The writer owns shares in Keaton.
