Coal of Africa has reported a decline in its run of mine coal production to 7,068t for quarter ended 31 December 2013, which the company attributed to the scaling-down of its loss-making collieries.

The run of mine coal production in the previous quarter stood at 202,910t.

Sales of export-quality coal decreased in Q4 of 2013 to 7,677t, from 56,799t in Q3.

The Vele colliery produced 7,068t of run-of-mine coal during the quarter, compared from 127,764t in the previous year.

The company said a letter of intent is being negotiated with ArcelorMittal South Africa (AMSA), following a positive coking coal test carried out by AMSA during Q3 of 2013, for the purchase of semi-soft coking coal to be produced by the Vele Colliery upon completion of its plant modifications.

Coal of Africa executive chairman David Brown said the company has made significant progress in its strategic turn-around strategy, which includes the sale of its non-core assets and the first draw-down against the Investec facility, which provided the funding required during the period.

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"The sale of Woestalleen and Opgoedenhoop is progressing well and we only await regulatory approval for these transactions," Brown said.

Brown noted that the Vele Colliery plant modifications, which are scheduled to start in the first half of this year, will allow the colliery to simultaneously produce semi-soft coking coal, sized thermal coal or export quality thermal coal and middlings coal for Eskom from 2015.

"ArcelorMittal undertook successful trials on a sample of semi-soft coking coal from Vele and the negotiation of a letter of intent indicates both parties’ intention to conclude an off-take agreement for the colliery’s metallurgical coal," Brown added.

Image: The Vele colliery produced 7,068t of run-of-mine coal during the quarter. Photo: courtesy of Coal of Africa.

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