The proposed open cut mine, which is 74% held by Coal of Africa, is planned to commence production in 2009 at rates of 1-1.5Mtpa, ramping up to full capacity by 2012.

Meanwhile, at the company’s Mooiplaats thermal project in Mpumalanga, the coal seam has been exposed in the box cut, surface infrastructure continues to be established and the first continuous miner is ready for delivery.

With the mining contract signed, Coal of Africa said it was on track to commence mining at the end of this year.

Coal of Africa managing director Simon Farrell said despite the global financial turmoil, the company would continue to meet planned developments.

“Alone amongst the major commodities, coal prices are holding up quite well,” he said.

“Whilst there has been a retreat on thermal coal prices, coking coal, which is our main focus, continues to enjoy spot prices well above the current year’s contract prices.”

By the time Mooiplaats comes into production, Coal of Africa will still have close to $A200 million in cash and no debt, according to Farrell.

Coal of Africa was trading up 17% mid-morning today at $A1.30.