Miranda Coal (Pty) Ltd, the wholly-owned subsidiary of multi-mineral JSE listed, exploration company Miranda Mineral Holdings (MMH), has begun breaking ground at its Sesikhona anthracite colliery in KwaZulu Natal, signalling the group’s long-awaited move into active mining.

This major development in the company’s history follows three years of exploration and identification of viable coal resources in the KwaZulu Natal coalfields, which have been traditional mining areas for more than 100 years.

In keeping with the company’s operating model, once the viability and extent of the Sesikhona resource had been identified, a mining partner was appointed.

“The selected mining partners for Sesikhona are Stefanutti Stocks Mining Services (SSMS), who were appointed after an intensive review of potential mining partners was undertaken by Miranda’s board.
“They were chosen because of their solid reputation within the mining sector and willingness to work within the parameters of Miranda’s comprehensive environmental, social and labour plans. This undertaking was important to Miranda, given its commitment to the local community, who is also Miranda’s equity partner in Sesikhona.

“SSMS began moving on site with heavy earthmoving equipment on schedule during May 2010 and then began the process of further developing the infrastructure required for the mine,” said Ron Nel, CEO of MMH. Work is progressing on removing topsoil, terracing the area, constructing haulage roads and storm water trenches. Recruitment and training of the labour required to commence with the first tranche of operations, using local people from the settlement area adjoining the mine, is also moving forward satisfactorily.

Development of the first box cut is about to commence and once a second pit has been established the mine is expected to deliver about 70 000 tons of ROM (run of mine) coal a month for the projected 52- month life of phase one of the project.

“Full mining of the Sesikhona resource will be underway shortly,” said Nel, who added that this could take place within the next few weeks.

“The company has been fortunate, as the Sesikhona mine is being developed in an area located near an existing rural settlement, which has seen mining in the past. Many of the local people therefore already had the skills required for our operational requirements,” said Nel.”  By the time full planned production gets underway, a staff complement of about 120 will be working on the mine, of which 70% will have been sourced from the local community,” Nel added.

The required technical staff has already assumed their allotted tasks on site and recruitment of key local personnel has taken place.

“Negotiations for the sale of the anthracite from Sesikhona are now in their final stages. Whilst we will be selling our product on an FOT (free on transport) basis, the area is well serviced with road and rail facilities that will enable our buyer to service their domestic customers, as well as take advantage of export opportunities.

“We are delighted that, after an extensive period of exploration and development, we have been able to unlock the value of our first coal project for shareholders. The opening of Sesikhona, our first project to be brought to fruition, is a major step forward for MMH and we anticipate that from now on the pace of delivery will be accelerated as Miranda begins the exploitation of its holdings in the KwaZulu Natal Klip River coalfields.

“As has already been announced, consideration is also being given to spinning off Miranda Minerals’ coal division into a separately listed entity that will operate under the name of Miranda Coal. Sesikhona will serve as the first project and the near-term coking coal projects will serve as the foundation of this activity.

“Miranda has remained focused on unlocking the inherent value within the exploration process, whilst capitalising on the opportunities available primarily in the coalfields of KwaZulu Natal.

“Although the area has been a centre of mining for more than 100 years, the development of more sophisticated prospecting methods and mining equipment has allowed unexploited viable coal seams to be located and mined. The area is underexplored and has the advantages of easy market access via Richards Bay and an existing infrastructure.

“We believe that the future for coal mining in KZN is bright. The present coal price has already recovered significantly, a trend that is reinforced by increasing demand for the commodity worldwide. This holds true particularly for metallurgical coal, which is expected to see growing demand for the foreseeable future resulting in a market supply deficit for at least the next three years.

Miranda Coal is well-positioned to benefit from these positive coal market fundamentals, holding Samrec coal resources of around 130 million tonnes, with an additional estimated 110 million tonnes of reconnaissance resources. We are continuing with exploration on our projects in KZN, which cover approximately 100 000 hectares in extent.

“Further announcements on development and mining operations by Miranda Mineral Holdings can be expected in the near future,” Nel concluded.