The South African Department of Mineral Resources (DMR) has granted a new order mining right (NOMR) to Coal of Africa (CoAL) for its Makhado hard coking and thermal coal project in Limpopo Province.

CoAL also secured the Section 11 approval from DMR for transferring its right to Baobab Mining & Exploration, its wholly owned subsidiary, which will serve as the project development company.

During 2013, the company completed a Class II definitive feasibility study on the Makhado project, which is projected to annually produce 2.3 million tonnes (Mtpa) of hard-coking coal over an expected life of 16 years.

The granting of the Section 11 approval will see the Makhado Colliery Community Development Trust acquire a 20% interest in Baobab and a further 6% by Yoright Investments.

Upon completion of the acquisition, Trust will own 20%, Yoright 6% and CoAL 74% of Baobab.

"As soon as development starts at Makhado, a meaningful contribution will be made to the growth and development goals of the province."

According to the CoAL, granting of the NOMR is a vital step towards sourcing the necessary funding to develop the project.

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CoAL plans to start project construction in the first half of CY2016 and continue it for a period of 26 months.

In addition, a further four month ramp-up phase will see the project produce 5.5Mtpa of sellable material.

CoAL chief executive officer David Brown said: "As soon as development starts at Makhado, a meaningful contribution will be made to the growth and development goals of the province, improving the socio-economic environment of the communities in the area of operation.

"Makhado’s capacity to produce hard coking and thermal coal alongside its close proximity to underutilised rail infrastructure ensures its role as a potential domestic and/or export supplier."

Image: The Makhado project is expected to produce 2.3 million tonnes (Mtpa) of hard coking coal a year. Photo: courtesy of Coal of Africa Limited.