CoAL considers name change, secures approval for Makhado Lite strategy
CREMER MEDIA / 27 OCTOBER 2017 - 17.00 / NATASHA ODENDAAL
JOHANNESBURG (miningweekly.com) – Triple-listed Coal of Africa Limited (CoAL) is reviewing potential second cash generatorprospects, the disposal of further noncore assets and a rationalisation of the bourses on which it is listed as it continues restructuring its balance sheet.
This followed the acquisition of the Uitkomst colliery, the approval for the Makhado Lite strategy and the sale of the Mooiplaats colliery at the end of September.
“I am pleased to report on another extremely positive quarter for CoAL as we integrated the Uitkomst colliery into our portfolio and advanced the sale of the noncore Mooiplaats colliery, resulting in its disposal at the end of September,” CoAL CEO David Brown said on Friday.
CoAL CEO David Brown - Photo by Duane Daws
Uitkomst had transformed CoAL into a coal producer and enabled the group to benefit from higher global coal prices.
In June, the company acquired Pan African Resources’ 91% stake in the Uitkomst metallurgical and thermal coal colliery, in KwaZulu-Natal, for R275-million, R25-million of which is deferred.
“The company is currently assessing Uitkomst’s coalmarketing options to maximise returns given the upward trend in export coal prices,” Brown explained.
With 9% of Uitkomst held by broad-based black economic empowerment (BEE) trusts, including employees and communities, CoAL is currently working to sell another 21% stake to BEE shareholders at the same value it acquired the colliery on a vendor financed basis.
Further, the board approval of the Makhado Lite hard coking coal project will significantly reduce capital requirements, unlock a shorter construction period, bring the operation into production faster than previously anticipated and extend the life-of-mine of the flagship project.
Despite the proposed lower output and required updates to costs, the revised Makhado development plan and its amended sales and marketing strategy is expected to deliver similar, positive internal rate of return used in the definitive feasibility study.
The revised strategy will bring down the construction phase from 26 months to 12, and reduce the peak funding to develop the operation from $281-million, or $406-million before foreign exchange fluctuations, to between $90-million and $110-million with a project payback period of four years.
It is expected that the project will produce 1.7-million tonnes a year of saleable coal, comprising 700 000 t to 800 000 t hard coking coal and 900 000 t to one-million tonnes a year of export quality thermal coal, compared with the initially planned 5.5-million tonnes a year, including 2.3-million tonnes of hard coking coal and 3.2-million tonnes of thermal coal.
It also allows for future expansion of mining and processing.
“The Makhado Lite project has the requisite regulatory approvals and the company is working to secure access to two key properties that allows us to complete the confirmatory geotechnical work required before construction commences to ensure the project footprint is appropriately positioned,” Brown noted.
This is expected to be completed by late in the first half of 2018 or early in the second half, with construction set to follow in the first half of 2019.
Meanwhile, the Vele coking and thermal coal colliery remained on care and maintenance during the first quarter of the year, while the idled Mooiplaats thermal coal colliery had been sold for R179.9-million.
In addition, CoAL has proposed a name change to MC Mining, with a special resolution set to be tabled at the company’s annual general meeting on November 24.
“CoAL was considered an appropriate name as it defined the company’s geographic and operational focus and it is the view of the present board that the company rebrand to reflect its potential growth, particularly of its hard coking (metallurgical) coal prospects,” Brown explained.
CoAL’s available cash as at September 30, was $7.8-million, with restricted cash of $500 000.
LINK - http://www.miningweekly.com/article/coal-considers-name-change-secures-approval-for-makhado-lite-strategy-2017-10-27/rep_id:3650
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER