JOHANNESBURG (miningweekly.com) – The financial loss of triple-listed South Africa-focused coal exploration, development and mining company Coal of Africa (CoAL) widened in the six months to end December, when its cash rose to $30-million.

The loss of the ASX-, Aim- and JSE-listed company of $14.3-million – well up on the $0.8-million for the corresponding period last year – included net foreign exchange loss of $9.4-million from US and Australian dollar exchange rates during the period.

CoAL’s key projects are the Vele coking coal and thermal coal project and the Greater Soutpansberg or MbeuYashu project, which includes the Makhado coking and thermal coal, all in Limpopo province.

Major announcements in the period were the acquisition of Universal Coal, obtaining 20-year water usage licences at both Vele and Makhado, and a funding launch for Makhado, where project house DRA is expected to complete front-end engineering design during May.

Vele’s original integrated water usage licence has also been amended in line with the requirements for the plant modification project at the colliery.

CoAL anticipates a decision on its application for a non-perennial stream diversion before the end of June.

Agreement has been reached for a broad-based black economic-empowerment consortium of seven local communities to take up 20% of Makhado and more empowerment shareholders are being identified to take up a further 6% to ensure that previously disadvantaged South Africans own the requisite 26% of Makhado.

Makhado's 26-month construction activities are expected to begin in the late second half of this calendar year, with a further four-month ramp-up phase resulting in forecast production of 5.5-million tonnes a year of saleable product.

“The award of the water licence for Makhado further signifies government's commitment to the company’s flagship project, and its potential to foster socioeconomic transformation,” the company, headed by CEO David Brown, said in a media release to Creamer Media’s Mining Weekly Online.

CoAL does not anticipate that the set-aside interim court interdict seeking to halt any mining or construction activity will affect Makhado's progress.

CoAL has placed the Mooiplaats thermal coal colliery on care and maintenance while it holds discussions with potential purchasers of the colliery.

The company has entered into a nonbinding memorandum of understanding with the Qingdao Hengshun Zhongsheng Group on a proposed equity investment in subsidiary Baobab, which is the legal owner of the Makhado mining right.

Hengshun, which is listed on China’s Shenzen Stock Exchange, wants to acquire up to 34% of Baobab for $113.94-million cash, which implies a Makhado project value of $335-million.

The proposed equity investment is subject to a $400-million engineering, procurement and construction contract being awarded to Hengshun, which has the right to match any alternative proposals for the provision of the mining contract.

The Universal transaction, identified as a value enhancing investment, will provide the enlarged group with immediate coal production and cash flow as well as a diversified portfolio of production, development and exploration projects with expected synergies to the existing CoAL business.

Shareholder Yishun Brightrise Investment has agreed to lend CoAL $10-million interest free.

CoAL is challenging the validity of a notice from Rio Tinto Minerals Development Limited and Kwezi Mining, which alleges that CoAL is in breach of a payment obligation and intends to defend its position vigorously.

Currently a total of $19-million is calculated to be owing on the original amount owed by CoAL and MbeuYashu of $75-million, which CoAL intends settling in June 2017.