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Coal of Africa, an emerging developer and producer of thermal and coking coal, was advised by Transnet Freight Rail (TFR) of a derailment of 10 wagons on Mozambique‘s Maputo rail corridor on 18 February 2013. This has resulted in all rail traffic between Komatipoort and Maputo being suspended.

The company says that based on current information, the suspension is for a period of at least seven weeks. TFR has attempted to establish alternative routes to the Matola Port which to date have been unsuccessful.

Further, Coal of Africa said that its subsidiaries – Limpopo Coal Company (the holding company for the Vele colliery), Langcarel (the holding company for Mooiplaats) and NuCoal Mining (the holding company for Woestalleen) have issued force majeure notices to their customers, contractors and other affected stakeholders.

In a statement the company said that it will implement measures at all operations to mitigate the commercial and operational impact of the force majeure, and noted that despite the incident production at Mooiplaats and Woestalleen would continue until stockpile capacity is exhausted.

However, it pointed out that existing stockpiles at Vele are at full capacity and have resulted in the temporary suspension of production which is expected to preserve cash resources by reducing costs as the colliery is currently in developmental and product testing phase.

Vele colliery‘s essential services will continue and a buffer contingency plan has been initiated to enable production to restart within 24 hours once TFR resumes operations on the Matola corridor.

In the second quarter of the 2013 financial year, the company reported production of 1.2 Mt run of mine coal of which 194 495 t (16.86%) was produced by the Vele colliery. The company exported for sale 41 297 t and in addition sold 418 355 t to the domestic market in the same period.

Coal of Africa‘s stated that its take or pay obligations will be appropriately adjusted as a result of the force majeure.

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