Exxaro Resources Clydesdale mine bought by Universal Coal

ASX-listed Universal Coal signed a deal with South African coal major Exxaro Resources that will transform the junior coal producer into a multi – mine coal producer.

For an undisclosed sum, Universal Coal has agreed to acquire all the assets and assume certain liabilities of Exxaro Reources New Clydesdale colliery (NCC), which is located adjacent to its own Roodekop deposit.

The acquisition of the NCC is a major step forward to becoming a mid – tier coal producer, and expedited the development of Universal Coal’s second operation on the heels of commissioning its Kangala mine. Kangala mine is expected to produce an estimate of 2.1 million tonnes of thermal coal in its first quarter of 2014.

Universal Coal’s Roodekop deposit contains a 84-million-tonne resource, of which 82.9-million tonnes is measured and is waiting the grant of a water use licence before development activities can commence. In combination with NCC’s established operation and infrastructure, the way forward to bringing the Roodekop mine on stream has been fast-tracked.

The NCC has been in operation since 1989, and has one of the oldest mines in the country. The mine was placed on care – and – maintenance in December 2014 and Exxaro Resources had been looking to divest of the project since April 2013.

NCC has generated a negative margin and the life of the mine has shortened beyond the profile that fits Exxaro Resources investment profile. Exxaro Resources believes that under the ownership of Universal Coal, further opportunities can be extracted through exploiting synergies with contiguous operations.

NCC, near Emalaneni in Mpumalanga came fully equipped with mining infrastructure and equipment and includes and extensive resource base, a coal beneficiation facility with an estimated capacity of about 2 million tonnes a year.


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