Universal Coal draft BFS indicates positive economics at Kangala thermal coal mine

Universal Coal (ASX: UNV) continues to deliver a positive news flow from the company's South African operations, with the draft Bankable Feasibility Study (BFS) for the Kangala project showing positive economics.

Universal is targeting at Kangala an initial 3 million tonne per annum run-of-mine open pit coal operation.
The first draft of the BFS from AMEC-Minproc indicates positive economics for Kangala in its current proposed form, with the results currently being reviewed by senior management, with recommendations to be made to the board.

The results are expected to be further optimised over the next couple of weeks.
The Kangala mine will produce both an Eskom grade and 5,400 Kcal/kg grade thermal coal from a Phase 1 operation, from within the open pit reserve area.

Importantly, Universal Coal is continuing discussions with various companies that have resources or mining operations in close proximity to the Kangala project that could lead to an upward revision of the potential returns identified by AMEC- Minproc in the draft study.

Tony Harwood, chairman, is very encouraged by the draft results commenting, “We are pleased with the positive draft results of the report received from AMEC-MinProc and we will be reviewing this study to improve further the project economics.

"We are also investigating various options and opportunities to add significantly to the Kangala project and create value to benefit this exciting project."

Universal Coal and will now proceed to review and optimize the project in order to improve the already positive techno-economics and to improve the level of engineering and estimate accuracy.

The final BFS is expected by the end of September 2011.

Adding some spice to Kangala is drilling will commence adjacent to the planned Kangala open pit area aimed at bringing 69 million tonnes of Inferred resources to the much higher confidence Measured category.

Universal said these resources may be incorporated into the current Kangala life-of-mine plan in the future.

Kangala has a Measured, Indicated and Inferred JORC Resource of 124 million tonnes.

Universal has a 70.5% ownership of Kangala.

Currently the company has a JORC Resource inventory across all projects of 819 million tonnes of export and domestic quality thermal and coking coal resources with a growth pipeline.

The resource breaks down as 491 million tonnes of coking coal, and 328 million tonnes of thermal coal.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/17527/universal-coal-draft-bfs-indicates-positive-economics-at-kangala-thermal-coal-mine--17527.html