UPDATE 1-Coal of Africa sees Vele output by April 2010

* First coal from Mooiplaats mined and sold

* Talks with Transnet on rail PPP on track

(Adds details)

JOHANNESBURG, Oct 26 (Reuters) - Coal of Africa (CoAL) (CZA.AX) said on Monday it expects to start production at its Vele coking coal project in South Africa by April next year if the government grants it a license as expected this quarter.

The company had earlier predicted for the license to be granted within the third quarter.

Vele will initially produce up to 1 million tonnes of coal per year, to be ramped up to 5 million tonnes, and supply steel maker ArcelorMittal SA (ACLJ.J) and exports.

"The Company expects the granting of a New Order Mining Right for its Vele coking coal project before the end of 2009 and production is expected to follow within four months of receiving the required legislative approval," Managing Director Simon Farrell said in a statement.

CoAL said it has railed and sold first coal from its Mooiplaats thermal coal project also in South Africa, with production in September reaching 30,000 tonnes of run of mine.

The miner has said it expects Mooiplaats to reach an annual run of mine production of 1.7 million tonnes by 2010, ramping up to 3.2 million tonnes by 2014.

Coal from Mooiplaats is expected to be railed to the Matola Terminal in Maputo, Mozambique, from where shipping is expected to commence by the end of this year.

CoAL said it had signed an off-take agreement with Traxys, a global mineral marketing company, for 35 percent of the export quality thermal coal from Mooiplaats.

The company said it has agreed the terms for a further 35-percent offtake with another global trader, with an agreement seen by end of 2009. CoAL is in talks with logistics group Transnet [TRAN.UL] to increase its rail allocation on the lines to the Matola terminal via a public-private partnership (PPP) deal.

The company's export allocation at the port stands at 1 million tonnes per annum, to be expanded to 3 million tonnes by late 2010 and with the potential to reach 13 million tonnes following an expansion of the export terminal.

"I am optimistic that the railways PPP initiative will ensure that the Company will be able to deliver significant tonnage of coal to the international and domestic markets," Farrell said.

Shares in CoAL were trading up 0.28 percent at 14.50 rand by 0744 GMT, roughly in line with the JSE Top-40 blue-chip index .JTOPI. (Reporting by Agnieszka Flak)