London (Platts)--19Feb2013/657 am EST/1157 GMT

South African junior miner Continental Coal said Tuesday its Penumbra underground thermal coal mine produced 14,031 mt of run-of-mine (ROM) coal in January, up more than five-fold from December's 2,694 mt, and it is on track for a successful ramp up in production in fiscal year 2013.

With the mine's second continuous miner expected to be running by the end of February, Continental said in a statement that it anticipates ROM production at Penumbra to be 20,000-25,000 mt in February and 35,000-40,000 mt in March. Production from the first continuous miner began in mid-December.

Penumbra, Continental's third operating mine in South Africa's Mpumalanga province, should reach steady operating levels of around 63,000 mt/month by June 2013. By then, the coal processed through the existing and adjacent Delta Processing Operations should achieve primary export yields of 67%, compared with the yields of 37.2% and 26.2% in January and December, respectively.

Continental said it sold 5,212 mt of export coal from Penumbra in January under an existing off-take deal with EDF Trading, up from the 854 mt sold in December, which were also the first export sales from the mine.

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The Penumbra mine is projected to produce 750,000 mt/year of ROM coal over an initial 10 year mine life at average total FOB costs of Rand 490/mt ($57/mt). Continental also forecast high quality export sales of 500,000 mt/year from the mine.

Meanwhile, Continental's Ferreira mine produced 56,886 mt of ROM coal in January, 12% higher than the average monthly ROM production in the December 2012 quarter. The miner attributed the rise to establishing new opencast mining operations in the adjacent and adjoining prospecting rights in the previous quarter.

In addition, the Vlakvarkfontein mine's January ROM production of 103,751 mt was in line with the December quarter's average monthly levels. Continental sold 111,992 mt of thermal coal from the mine, 96,172 mt to state-owned utility Eskom.

Continental's three operating mines have a combined ROM production rate of 2.8 million mt/year of export and domestic thermal coal.

--Jacqueline Holman, jacqueline_holman@platts.com
--Edited by Jeremy Lovell, jeremy_lovell@platts.com

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