This means first coal production is likely to be achieved in quarter four of 2012.

Penumbra is 38.2% complete with a total forecast cost of ZAR328 million ($A38.5 million).

Continental said the project was “substantially on budget”

In June the focus was on the advance of the twin declines and the mobilisation to site of contractors for the construction and installation of site infrastructure works and services.

During June the twin declines advanced another 92 metres. As at June 29 the declines had been advanced to a combined total length of 325m. The conveyor road has advanced down 170m and the travelling road down 155m.

Decline development during the month was focused on achieving a regular cycle of three blasts a day and achieving an average face advance per blast of more than 2.2m.

By the end of June this was regularly being achieved, with weekly progress exceeding 30m.

Other Penumbra activities included the start of fabrication of the site offices and other site infrastructure and acceptance tests for the 630 kilovolt-Ampere and 1250kVA transformers.

Work is focused on erecting the incline conveyor steel structure and adjudicating the awards for the main ventilation fans, raw water pumping system and managing the various civil and building contracts.

Forecast capital costs for the mine development are fully funded. Costs to date have been funded from cash and the balance is to be met from a secured project finance tranche of funding from ABSA Capital.

In addition Continental has a contingency fund of about $US4.5 million to cover any potential overruns.

Penumbra is set to produce 750,000 tonnes per annum of run of mine coal.

ROM production will be beneficiated through the existing and adjacent Delta Processing Operations. Delta has a 1.8 million tonne per annum coal processing plant and the 1.2Mtpa Anthra Rail Siding.

Sales of 500,000tpa RB1 specification coal product are forecast to start in early quarter 4 2012.

The export thermal coal will be railed to the Richards Bay Coal Terminal and sold under existing off-take agreements.