The coal is to be supplied by its Kangala project and the first coal delivery is scheduled for April 2014.

Kangala is Universal’s first operation, a domestic thermal coal operation supplying coal primarily to Eskom.

The execution of the sales agreement meets one of the major conditions of the project’s financing by the Rand Merchant Bank (RMB).

“It’s all systems go for Universal Coal as the execution of the coal sales agreement sets a definitive delivery date and meets one of the critical conditions precedent set by RMB for first drawdown on the debt facility,” Universal CEO Tony Weber said.

The announcement comes after Universal last week announced its results for the six months ended December 31, 2012.

The company posted a loss of $3.4 million.

“Universal Coal is a near-term coal exploration company and had no mines operating in the period,” the company said in the results release.

“The loss was attributable mainly to operating, administration, regulatory and finance costs.”

Universal’s coal assets are all located in South Africa.

The company has three thermal exploration coal projects in the Witbank coalfield in Mpumalanga Province and two exploration coking coal projects in Limpopo Province.