JOHANNESBURG (miningweekly.com) – ASX-, Aim- and JSE-listed Coal of Africa Limited (CoAL) has concluded agreements with broad-based black economic-empowerment partners to acquire a 26% stake in the Makhado hard coking and thermal coal project, near Musina, in Limpopo.
The transaction resulted in the formation of the Makhado Colliery Community Development Trust, which represented seven local communities living in the vicinity of the proposed colliery. The trust would hold a 20% stake in the project.
The broad base of the trust’s beneficiaries ensured that the Makhado project would significantly benefit local communities.
“[This] is a critical step to obtaining the Makhado project mining right [and] reaffirms CoAL’s commitment to empowerment. The Makhado colliery will be the first of its type in the Soutpansberg and the company anticipates that the relevant regulatory approvals will be granted in due course,” CoAL CEO David Brown commented on Friday.
The remaining 6% was acquired by entrepreneur Mike Nkuna’s Yoright Investments. The shareholder grouping would include historically disadvantaged South Africans and other black entrepreneurs.
The trust and Yoright had to raise sufficient funding within two years, or another date agreed on by the parties. The final amount payable was subject to due diligence and would be negotiated with the company following these processes.
The transaction ensured that the Makhado project complied with mining legislation in South Africa and satisfied one of the last remaining requirements for the granting of a new-order mining right.
Meanwhile, the coal miner noted that it was working with farmers and local communities, who, in December, obtained an interim court interdict to stop any mining or construction activity at the Makhado site.
Concerns were raised about the proposed development of the openpit coal mine in a water-stressed farming area.
The company believed the legal action would impede on the delivery timetable for the mine to enter into commercial production during 2019, as construction would not start this year.
The mine would be built at a cost of about $400-million and would produce about 2.3-million tonnes of coking coal and about 3.2-million tonnes of thermal coal a year over a 16-year mine life.