Shares in Coal Of Africa (LON:CZA) jumped by nearly 9% to 89p today on news that the mining group had finally got the regulatory green light in South Africa to carry out a farm swap agreement with Rio Tinto (LON:RIO) . The move wraps up a deal between the two sides that was originally set out in July 2008 and will see Rio’s JV companies Kwezi Mining and Chapudi Coal swap farm rights with CoAL over land close to CoAL’s Makhado coking coal project in Limpopo province. The deal means CoAL can now lodge a New Order Mining Right application for the extended Makhado project and creates an additional three significant coal projects, to boost the company’s coking coal portfolio.

CoAL said it anticipated that the new mining application would be lodged before the end of the calendar year, followed closely by an application for an Integrated Water Use Licence and further relevant approvals, as required. The Rio farm swap agreement creates three significant coal projects around Makhado, namely the Mount Stuart coking coal project, the Voorburg coking coal project and the Jutland coking coal project, together with an additional two farms which will form a natural extension to Makhado.

CoAL’s existing projects include the Woestalleen Colliery, the Mooiplaats thermal coal mine, the Vele coking coal project and the Makhado project. Mooiplaats began production in 2008 and is currently ramping up to produce 2m tonnes per annum. Makhado is expected to start production in 2012 and timing for Vele to reach production is expected to begin in the fourth quarter of 2010. These operations are targeted to collectively produce an initial 2 Mtpa ramping up to a combined annual output of 10 Mtpa of coking coal. Earlier this year CoAL paid ZAR467m for NuCoal Mining, a thermal coal producer with assets in South Africa in close proximity to the Mooiplaats mine. NuCoal owns the Woestalleen Colliery, which has a number of off-take contracts in place and processes approximately 2.5Mtpa of saleable coal for domestic and export markets.

Commenting on the latest developments, John Wallington, the chief executive of CoAL, said: “This farm swap agreement between Rio Tinto and CoAL gives both companies the potential to develop significantly larger scale contiguous and economic…

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