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Petmin - update on approval of construction
Petmin Ltd announced that the board has approved capital expenditure of R120 million for the construction of the second coal processing plant at its Somkhele mine in Kwa Zulu-Natal, South Africa. The construction of a second plant will double current production capacity to approximately 1.1 million sales tonnes a year. It is anticipated that the plant will be funded with a combination of debt (not more than 65%) and the company's own cash resources. Petmin's cash resources are in excess of R230 million and the company's debt gearing ratio is less than 10%. The plant will be commissioned by 31 December 2011.
Somkhele, which lies 85 kilometres to the north-east of Richards Bay, is the second largest producer of high quality metallurgical anthracite in South Africa. The additional capacity of approximately 535,000 saleable tonnes per annum will position Somkhele as the largest producer of metallurgical anthracite in the country. Somkhele is currently mining on approximately 1 400 hectares and exploring on a further 23 000 hectares, with SAMREC-compliant reserves and resources of 51.2 million tonnes.
Following an accelerated exploration drilling programme completed in June 2009, additional resources of 24 million tonnes were delineated in the Luhlanga, KwaQubuka and Emalehlene coal deposits which are in close proximity to the current processing plant. The mine, which supplies both local and overseas markets, has a dedicated export facility of 600,000 tonnes per annum at the Richards Bay Dry Bulk Terminal and is well positioned to grow its export market. Petmin acquired Somkhele in November 2005 and the mine was commissioned in June 2007. Its other assets are the SamQuarz silica mine and a 25% interest in the Veremo pig-iron project, both in Mpumalanga Province.
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