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IchorCoal makes bid for Universal

IchorCoal CEO Nonkululeko Nyembezi-Heita

IchorCoal CEO Nonkululeko Nyembezi-Heita

Photo by Duane Daws

21st August 2015

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – International coal producer IchorCoal intends to make an all-cash offer of A$80-million to acquire the shares in ASX-listed miner Universal Coal that it does not already own.

The international mining company, led by CEO Nonkululeko Nyembezi-Heita, is focused on thermal coal production in South Africa. It recently increased its shareholding in Universal to more than 29.99%, following the conversion of 71.2-million noncumulative convertible preferred shares.

Universal currently holds a number of thermal and coking coal projects, including the Kangala mine, which produced 1.7-million tonnes of saleable coal in the 2015 financial year.

IchorCoal's offer represented a 61.6% premium over Universal’s closing price on June 10, at which time IchorCoal noted its intentions to make a takeover offer for Universal.

The offer also represented a premium of some 46.5% over the volume weighted average price of Universal’s shares over the past 60 days and a 45.5% premium over the company’s closing price on August 20.

In a document lodged with the ASX, IchorCoal noted that the consolidation of its interest in Universal, along with its own existing coal mining interests in South Africa, would provide the most robust platform to manage uncertainty in current market conditions.

The company pointed out that Universal had seen a significant fall in its share price since listing in 2010, adding that investor sentiment was likely to worsen as the current market conditions continued.

IchorCoal told Universal shareholders that the takeover offer provided an attractive opportunity to realise, in cash and at an attractive premium, their investment in a highly liquid stock, which had not paid a dividend since listing on the ASX.

The offer was subject to shareholder approval.

Universal on Friday told shareholders that the company’s independent directors would meet shortly to consider the offer, but it had asked that shareholders not take any action until a recommendation was made.

“Despite weak market conditions, Universal Coal is achieving record production and sales and delivering strong cash flow. The company is on the cusp of bringing its next operation on stream, which it expects will double the group’s production to in excess of five-million tonnes a year within 18 months,” chairperson John Hopkins said.

“Ultimately, shareholders will have to decide whether they, or IchorCoal, will benefit from the company's development pipeline of metallurgical and coal assets, ongoing strong cash flow and considerable growth potential.”

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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