TIDMCZA
RNS Number : 4912M
Coal of Africa Limited
31 July 2017
ANNOUNCEMENT 31 July 2017
REPORT FOR THE QUARTERED 30 JUNE 2017
CASH GENERATOR ACQUIRED AND PROJECT FUNDING DRAWDOWN
Coal of Africa Limited ("CoAL" or "the Company") which operates
in South Africa, together with its subsidiaries, hereby provides
its update for the quarter ended 30 June 2017 (the "Quarter"). All
figures are denominated in United States dollars unless otherwise
stated. A copy of this report is available on the Company's
website, www.coalofafrica.com.
Salient operational features
-- No lost-time injuries ("LTIs") recorded during the Quarter (FY2017 Q3: nil).
-- Mooiplaats Thermal Coal Colliery ("Mooiplaats Colliery") and
the Vele Coking and Thermal Coal Colliery ("Vele Colliery")
remained on care and maintenance.
-- The suspension of the Integrated Water Use Licence ("IWUL")
for the Makhado Coking Coal Project ("Makhado Project" or
"Makhado") was lifted by the South African Minister of the
Department of Water and Sanitation ("DWS").
Corporate and financial features
-- Pan African Resources Coal Holdings ("PAR Coal") was acquired
from Pan African Resources Plc for a purchase price of R275 million
(US$20.5million) on 30 June 2017, of which R25 million (US$1.9
million) is deferred.
-- Successful placement of US$3 million by M&G Investment
Management Ltd ("M&G"), US$10 million by Summer Trees Pte Ltd
and the conversion of the balance of US$0.2 million of the Yishun
Brightrise Investment PTE Limited ("YBI") loan to equity.
-- The first drawdown of R120 million (US$9.2 million) from the
Industrial Development Corporation ("IDC") was completed.
-- Repayment of the final balance owing to Rio Tinto for the
acquisition of the Greater Soutpansberg Project ("GSP") assets of
US$8.2 million.
-- Available cash at period end of US$9.7 million and restricted cash of US$0.05 million.
-- Positive coking and thermal coal price movements over the
Quarter principally due to market supply constraints.
QUARTERLY COMMENTARY
Acquisition of the Uitkomst Colliery
During the Quarter, the Company completed the acquisition of PAR
Coal, 91% owner of the Uitkomst Colliery, for a purchase price of
R275 million (US$20.5 million).
The Uitkomst Colliery is a high grade thermal export quality
coal deposit with metallurgical applications, which is situated in
the Utrecht coalfields in KwaZulu Natal. The Uitkomst Colliery
consists of an existing underground coal mine and a planned life of
mine extension. The operating mine is easily accessible and
well-established. Existing infrastructure such as power supply,
water supply, buildings, workshops, weighbridge, water storage and
management facilities are all in place. The Uitkomst Colliery
currently employs approximately 520 employees (including
contractors).
For the year ended 30 June 2017, prior to the effective date of
acquisition, the Uitkomst Colliery reported five LTI's. This will
be a focus point for CoAL in the year ahead. The plant produced
508,510 tonnes which consisted of 458,350 mined tonnes and 50,160
bought in tonnes.
Makhado Coking Coal Project - Soutpansberg Coalfield (100% owned
- 74% post BBBEE transaction)
The Makhado Project recorded no LTIs (FY2017 Q3: nil) during the
Quarter.
During FY2016 Q2, the Makhado Project was granted a twenty year
IWUL. This was appealed by the Vhembe Mineral Resources Forum and
other parties and the IWUL was automatically suspended under
Section 148(2) (b) of the South African National Water Act No. 36
of 1998. During this Quarter, pleasingly, the suspension was lifted
by the South African Minister of the DWS. As a result, the Makhado
Project moves closer to becoming fully permitted.
It is noted that the regulatory process is time consuming and
complex but it is an appropriate process as once completed it
ensures a measurable framework for both State and Company. The
Company remains committed to pursuing the permitting completion
process as efficiently as possible.
Baobab Mining and Exploration Proprietary Limited ("Baobab"), a
subsidiary of CoAL, is the operating entity for the Makhado Project
and holds, in addition to the IWUL, the Environmental Authorisation
("EA") and the mining right.
Originally Makhado's development plan included a twenty six
month construction phase followed by a four month ramp up to
achieve a production rate of 5.5 million tonnes per annum ("mtpa")
with a capital requirement of US$281 million. While the Company has
progressed with the regulatory matters, it has started a process of
reviewing Makhado's development plan which entails, re-assessing
its strategy, which may or may not result in a reduced capital
expenditure, a lower production rate and a shorter construction
period through to earlier than planned production, with an extended
mine life. This revised strategy would also look to incorporate a
manageable marketing and funding plan. Despite the proposed lower
output Makhado would still look to deliver positive returns for
shareholders. A detailed report on the revised strategy for Makhado
is due to be reviewed by CoAL's Board in September 2017.
CoAL remains committed to the sustainable development of the
Makhado Project, recognising its potential to drive significant
socio-economic transformation. The Company continues to engage with
all stakeholders to ensure the on-going implementation of a
co-existent model, seeking co-operation between mining, agriculture
and heritage land uses.
CoAL continues to monitor the process of ownership for certain
surface rights on which the project will be constructed.
Mooiplaats Thermal Coal Colliery - Ermelo Coalfield (74%
owned)
The Mooiplaats Colliery remained on care and maintenance
throughout the Quarter. No LTIs were recorded during the period
(FY2017 Q3: nil).
CoAL continues to be committed to delivering a successful sale
of the Mooiplaats Colliery as soon as possible and a number of
interested parties remain at various different stages of financial
assessment and completion of the due diligence process.
Vele Coking and Thermal Coal Colliery - Limpopo (Tuli) Coalfield
(100% owned)
The Vele Colliery remained on care and maintenance throughout
the Quarter. No LTIs were recorded during the Quarter (FY2017 Q3:
nil).
CoAL awaits the granting of an IWUL by the DWS, which is the
final approval required to complete the regulatory approvals
process for the stream diversion in respect of the Plant
Modification Project. Once all regulatory approvals are in place,
the Company will be in a position to consider current market
pricing and off-take agreements to conclude on an investment
decision favourable to the Company.
Greater Soutpansberg Project (MbeuYashu) (74% owned)
The MbeuYashu Project recorded no LTIs (FY2017 Q3: nil) during
the period.
No further developments to report during the Quarter.
IDC Loan
During the Quarter, the Company completed its first drawdown of
R120 million (US$ 9.2 million) of the loan agreement with the IDC
and Baobab for the Makhado Project. The loan's proceeds are being
used to advance the operations and implementation of the Makhado
Project.
The loan funding is subject to the following conditions:
-- The IDC advancing to Baobab in two equal tranches (first tranche completed) of R120 million (US$9.2million) upon written request from Baobab;
-- Each Tranche having a three-year repayment period and
accruing interest at a real after-tax rate of 16% per annum;
-- Subject to the provisions of the Loan Agreement, CoAL
standing surety for Baobab's obligations to ensure repayment of the
loan amount in instances in which Baobab defaults on such
payments;
-- CoAL issuing to IDC warrants (in respect of CoAL shares)
pursuant to each advance date as soon as the relevant shareholder
approval for the issue has been received. The warrants relating to
the first drawdown will be issued in due course. Approximately 48
million warrants are to be issued at South African 0.60 cents per
share;
-- Baobab and CoAL providing the IDC with warranties,
representations and undertakings which are customary in a loan
funding agreement of this nature;
-- IDC having the right to appoint one director to the Boabab
board and to be a member of the Makhado Project steering committee
during the loan repayment period; and,
-- Upon each advance date, Baobab issuing new ordinary shares in
Baobab to the IDC, equivalent to 5% of the entire issued share
capital of Baobab at such time. CoAL's shareholding in Baobab will
be diluted accordingly. Notwithstanding such dilution, CoAL will
retain a majority shareholding in Baobab of not less than 64%.
The 5% of Baobab's shares for the first tranche have been issued
and the shareholding is now as follows:
-- CoAL 69%;
-- Makhado Colliery Development Trust 20%;
-- Yoright Investments Proprietary Limited 6%; and,
-- IDC 5%.
Corporate
CoAL has continued to restructure its balance sheet and ensure
that it is well positioned to unlock shareholder value in the
near-term from its flagship Makhado Project. As part of this
restructuring, the Company has recognised the limited cash flow to
be generated during Makhado's pre-production phase over the next
two years. The acquisition of the Uitkomst Colliery therefore
represented a highly compelling and attractive value proposition
that CoAL believes will provide immediate cash flows to support the
Company as it continues to progress with the development of the
Makhado Project. In addition the Company will continue to progress
the sale of the Mooiplaats Colliery which will bolster the
Company's balance sheet with the sale proceeds but equally
important, it will also reduce CoAL's annual overheads. The Company
is still reviewing prospects for the acquisition of a second cash
generator which will represent another step in the process of
becoming self-sufficient.
CoAL also received confirmation that Fifth Season Proprietary
Limited is in the process of funding its full and final settlement
of the outstanding balance to the Company which is subject to
completion of certain conditions precedent, regarding the disposal
of the previously announced Opgoedenhoop Mining Right. The Company
continues to interact around the outstanding balance and is hopeful
that it will be received in due course. The capital balance
outstanding is approximately R15million, including VAT, but
excluding accrued interest.
Markets
The hard coking price has reflected short term supply
constraints owing to disruptions caused by weather and
infrastructure problems. The current price movement underpins the
tightness of world supply and, as such, is positive for longer term
pricing. Thermal coal prices have also reflected more positive
fundamentals in the short term.
David Brown, CEO commented:
"I am pleased to report on an extremely positive Quarter for
CoAL as it transitioned into a coal producer following the
successful conclusion of the acquisition of the cash generating
asset, the Uitkomst Colliery. This acquisition was achieved
alongside the Company completing its first drawdown of the IDC loan
and importantly, the final legacy payment to Rio Tinto.
"Going forward, CoAL will remain focused on the sale of the
Mooiplaats Colliery, in conjunction with progressing the revised
development strategy for the Company's flagship asset, the Makhado
Coking Coal Project, which will deliver positive returns for
shareholders in the near-term."
Authorised by
David Brown
Chief Executive Officer
For more information contact:
Chief Executive +27 10 003
David Brown Officer Coal of Africa 8000
Chief Financial +27 10 003
De Wet Schutte Officer Coal of Africa 8000
Endeavour Corporate +61 08 9316
Tony Bevan Company Secretary Services 9100
Company advisors:
Matthew Armitt/Ross Nominated Adviser Peel Hunt +44 20
Allister and Broker LLP 7418 8900
Jos Simson/Emily Financial PR +44 20
Fenton (United Kingdom) Tavistock 7920 3150
Charmane Russell/Olwen Financial PR Russell & +27 11
Auret (South Africa) Associates 880 3924
or
+27 82
372 5816
Investec Bank Limited is the nominated JSE Sponsor
About CoAL:
CoAL is an AIM/ASX/JSE listed coal exploration, development and
mining company operating in South Africa. CoAL's key projects
include the producing Uitkomst Colliery (thermal coal), the Vele
Colliery (coking and thermal coal), the Greater Soutpansberg
Project /MbeuYashu, including CoAL's flagship Makhado Project
(coking and thermal coal).
Tenements held by CoAL and its Controlled Entities
Project Name Tenement Number Location Interest Change in quarter
------------------------------- -------------------------------- ------------- --------- --- ------------------
Chapudi Project* Albert 686 MS- Limpopo 74%
Bergwater 712 MS-- 74%
Remaining Extent and Portion 2
of Bergwater 697 MS-- 74%
Blackstone Edge 705 MS 74%
Remaining Extent & Portion 1 of
Bluebell 480 MS- 74%
Remaining Extent & Portion 1 of
Bushy Rise 702 MS-- 74%
Castle Koppies 652 MS-- 74%
Chapudi 752 MS -- 74%
Remaining Extent, Portions 1, 3
& 4 of Coniston 699 MS-- 74%
Driehoek 631 MS-- 74%
Remaining Extent of
Dorps-rivier 696 MS-- 74%
Enfield 512 MS (consolidation
of Remaining Extent of Enfield
474 MS, Brosdoorn 682 MS &
Remaining
Extent of Grootvlei 684 MS)-- 74%
Remaining Extent and Portion 1
of 74%
Grootboomen 476 MS- 74%
Grootvlei 684 MS-- 74%
Kalkbult 709 MS 74%
Remaining Extent, Remaining
Extent of Portion 2, Remaining
Extent of Portion 3, Portions
1,
4, 5, 6, 7 & 8 of Kliprivier
692 MS- 74%
Remaining Extent of Koodoobult
664 MS- 74%
Koschade 657 MS (Was Mapani Kop
656 MS)- 74%
Malapchani 659 MS- 74%
Mapani Ridge 660 MS- 74%
Melrose 469 MS- 74%
Middelfontein 683 MS- 74%
Mountain View 706 MS- 74%
M'tamba Vlei 654 MS 74%
Remaining Extent & Portion 1 of
Pienaar 635 MS- 74%
Remaining Extent & Portion 1 of
Prince's Hill 704 MS- 74%
Qualipan 655 MS- 74%
Queensdale 707 MS- 74%
Remaining Extent & Portion 1 of
Ridge End 662 MS- 74%
Remaining Extent & Portion 1 of
Rochdale 700 MS- 74%
Sandilands 708 MS- 74%
Portions 1 & 2 of Sandpan 687
MS-- 74%
Sandstone Edge 658 MS- 74%
Remaining Extent of Portions 2
& 3 of Sterkstroom 689 MS-- 74%
Sutherland 693 MS- 74%
Remaining Extent & Portion 1 of
Varkfontein 671 MS-- 74%
Remaining Extent, Portion 2,
Remaining Extent of Portion 1
of Vastval 477 MS- 74%
Vleifontein 691 MS- 74%
Ptn 3, 4, 5 & 6 of Waterpoort
695 MS-- 74%
Wildebeesthoek 661 MS- 74%
Woodlands 701 MS- 74%
-------------------------------- --------------------------------------------- --------- --- ------------------
Kanowna West and M27/41 Coolgardie^ 3.81%
Kalbara M27/47 3.81%
M27/59 3.81%
M27/72,27/73 3.81%
M27/114 3.81%
M27/181 7.89%
M27/414,27/415 3.81%
M27/493 3.89%
M27/494,27/495 7.89%
P27/1826-1829 3.81%
Abbotshall Royalty ML63/409,410 Norseman^ Royalty
------------------------------- -------------------------------- ------------- --------- --- ------------------
Kookynie Royalty ML40/061 Leonora^ Royalty
ML40/135,136 Royalty
------------------------------- -------------------------------- ------------- --------- --- ------------------
Makhado Project Fripp 645 MS Limpopo 100%(#)
Lukin 643 MS 100%(#)
Mutamba 668 MS 100%(#)
Salaita 188 MT 100%(#)
Tanga 849 MS 100%(#)
Daru 848 MS 100%(#)
Windhoek 847 MS 100%(#)
Generaal Project Beck 568 MS-- Limpopo 74%
Bekaf 650 MS- 74%
Remaining Extent & Portion 1 of
Boas 642 MS- 74%
Chase 576 MS- 74%
Coen Britz 646 MS- 74%
Fanie 578 MS- 74%
Portions 1, 2 and Remaining
Extent of Generaal 587 MS- 74%
Joffre 584 MS- 74%
Juliana 647 MS 74%
Kleinenberg 636 MS- 74%
Remaining Extent of Maseri Pan
520 MS- 74%
Remaining Extent and Portion 2
of Mount Stuart 153 MT-- 100%
Nakab 184 MT-- 100%
Phantom 640 MS-- 74%
Riet 182 MT-- 100%
Rissik 637 MS- 100%
Schuitdrift 179 MT- 100%
Septimus 156 MT-- 100%
Solitude 111 MT- 74%
Stayt 183 MT-- 100%
Remaining Extent & Portion 1 of
Terblanche 155 MT-- 100%
Van Deventer 641 MS- 74%
Wildgoose 577 MS- 74%
-------------------------------- --------------------------------------------- --------- --- ------------------
Mopane Project* Ancaster 501 MS-- Limpopo 100%
Banff 502 MS- 74%
Bierman 599 MS- 74%
Cavan 508 MS 100%
Cohen 591 MS-- 100%
Remaining Extent, Portions 1 &
2 of Delft 499 MS- 74%
Dreyer 526 MS-- 74%
Remaining Extent of Du Toit 563
MS- 74%
Faure 562 MS 74%
Remaining Extent and Portion 1
of Goosen 530 MS -- 74%
Hermanus 533 MS- 74%
Jutland 536 MS-- 100%
Krige 495 MS- 74%
Mons 557 MS- 100%
Remaining Extent of Otto 560 MS
(Now Honeymoon)- 74%
Remaining Extent & Portion 1 of
Pretorius 531 MS- 74%
Schalk 542 MS- 74%
Stubbs 558 MS- 100%
Ursa Minor 551 MS-- 74%
Van Heerden 519 MS-- 74%
Portions 1, 3, 4, 5, 6, 7, 8,
9, Remaining Extent of Portion
10, Portions 13, 14, 15, 16,
17, 18, 19, 20, 21, 22, 23,
24, 26, 27, 29, 30, 35, 36,
37, 38, 39, 40, 41, 44, 45,
46, 48,
49, 50, 51, 52 & 54 of Vera
815 MS 74%
Remaining Extent of Verdun 535
MS- 74%
Voorburg 503 MS-- 100%
Portions 1, 9,14,17,18,19,20 &
Mooiplaats Colliery and Remaining Extent of Mooiplaats
prospects 290 IT Mpumalanga 74%
Portion 2, 3 and Remaining
Extent of Klipbank 295 IT 74%
Portions 1, 2 and Remaining
Extent of Adrianople296 IT 74%
Portions 2 & 3 of Willemsdal
330 IT 74%
Portions 2, 3, 4 & Remaining
Extent) of De Emigratie 327 IT 74%
Remaining Extent and Portions
2, 5, 8,10 & 13 of
Buhrmansvallei 297 IT 74%
Klipfontein 442 IT 74%
Portions of Overvlakte 125 MS
(Remaining Extent, 3, 4, 5, 6,
Vele Colliery and prospect 13, 14) Limpopo 100%
Bergen Op Zoom 124 MS 100%
Semple 155 MS 100%
Voorspoed 836 MS 100%
Alyth 837 MS 100%
-------------------------------- --------------------------------------------- --------- --- ------------------
Certain portions of Unsurveyed
Tshikunda State Land known as Mutale Limpopo 60%
------------------------------- -------------------------------- ------------- --------- --- ------------------
Coal bed methane Adelaide 91 MT Limpopo 50%
Adieu 118 MT 50%
Alicedale 138 MT 50%
Armstice 120 MT 50%
Bergwater 697 MS 50%
Bergwater 712 MS 50%
Blackstone Edge 705 MS 50%
Bushy Rise 702 MS 50%
Chapudi 752 MS 50%
Charlotte 90 MT 50%
Chase 576 MS 50%
Cross 117 MT 50%
Doppie 95 MT 50%
Ettie 33 MT 50%
Fanie 578 MS 50%
Feskraal 85 MT 50%
Folorodwe 79 MT 50%
Fripp 645 MS 50%
Gray 189 MT 50%
Hettey 93 MT 50%
Jeannette 77 MT 50%
Joffre 584 MS 50%
Kalkbult 709 MS 50%
Laura 115 MT 50%
Lukin 643 MS 50%
Magazasand 123 MT 50%
Malapchani 659 MS 50%
Mountainview 706 MS 50%
Mount Stuart 153 MT 50%
Nakab 184 MT 50%
Naus 178 MT 50%
Neltox 92 MT 50%
Phantom 640 MS 50%
Prince's Hill 704 MS 50%
Queensdale 707 MS 50%
Riet 182 MT 50%
Rochdale 700 MS 50%
Rynie 158 MT 50%
Salaita 188 MT 50%
Schuitdrift 179 MT 50%
Septimus 156 MT 50%
Stayt 183 MT 50%
Suzette 32 MT 50%
Tanga 648 MS 50%
Telema 190 MT 50%
Terblanche 155 MT 50%
Trevenna 119 MT 50%
The Duel 186 MT 50%
Truida 76 MT 50%
Van Deventer 641 MS 50%
Wendy 86 MT 50%
Wildgoose 577 MS 50%
Windhoek 649 MS 50%
Zisaan 31 MT 50%
Ziska 122 MT 50%
Portion of Unsurveyed state
land 50%
-------------------------------- --------------------------------------------- --------- --- ------------------
* Form part of the Greater Soutpansberg Project
- Lapsed - Mining Right Application Lodged
-- Valid - Mining Right Application Lodged
Tenement located in the Republic of South Africa
^ Tenement located in Western Australia
(#) CoAL's interest will reduce to 74% owned on completion of
the Broad Based Economic Empowerment transaction
This information is provided by RNS
The company news service from the London Stock Exchange
END
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