SA govt approves Rios, CoAL swap

[] — COAL of Africa said its Rio Tinto farm swap agreement was approved by the South African government, allowing the miner to lodge a New Order Mining Right application for its flagship Makhado coking coal project.

As part of the agreement, Coal of Africa has also gained three new potentially significant coking coal projects: Mount Stuart, Voorburg and Jutland.

“This farm swap agreement between Rio Tinto and Coal of Africa gives both companies the potential to develop significantly larger scale contiguous and economic coal projects,” said Coal of Africa’s CEO, John Wallington.

The miner expects to lodge the mining right application before the end of the calendar year.

The London-listed shares rose 6.4% at 0812 GMT, compared with a 1.7% gain in a British mining index.

However, the shares have fallen 10% since mid-August when problems were reported at its Vele Colliery in South Africa. “In the background, it (the approval) also shows that the group’s relationship with the South African Department of Mineral Resources is still working and we anticipate hearing news of progress at Vele over the coming weeks,” said Evolution Securities in a note.

Last month, Coal of Africa was forced to halt some construction activities at Vele after a government order said it had contravened environmental laws.

“Coal of Africa’s share price has been undermined by the problems at Vele, but we believe that these will be resolved and that production of coal from the licence area will start before the end of the year,” Evolution added.