JOHANNESBURG (miningweekly.com) – New black-owned and controlled coal mining and exploration group Optimum Coal listed in the general mining sector on the JSE's main board on Monday, opening with its first trade at R31,85 a share, slightly below the R32 a share placement price.

Optimum has 248,5 million ordinary shares in issue with a market capitalisation of around R8 billion and there was an instant trade of 416 000 shares upon listing.

The company, which was taken over from BHP Billiton nearly two years ago, sees itself as a black economic-empowerment (BEE) coal consolidator. The capital-raising listing netted it close to R1,5-billion.

The company's BEE ownership, currently at 60%, must remain above 50% until at least May 2014, Optimum CEO Mike Teke confirmed, within earshot of the attentive South African Mineral Resources Minister Susan Shabangu, who was a surprise guest.

From this week, the company, which already has a strong operational footprint, will own 91% of Koornfontein coal-mine, which is synergistic to the nearby Optimum colliery.

"We have strong growth prospects," Teke told Mining Weekly Online in a video interview.

Optimum CFO Doug Gain said that the company saw considerable opportunity to use equity to acquire coal assets that were either stressed or unable to be monetised in private hands.

"We're still in a market where raising debt is not easy. We think that with our balance sheet and BEE credentials, we are ideally placed to take advantage of acquisitions and we need an additional currency over and above cash and debt to be able to do that.

"Importantly, at this stage in the market's cycle, we believe that we can buy assets for 50c and 60c in the rand on a value-accretive basis to be able to grow the pipeline that we currently have," Gain told Mining Weekly Online in a video interview.

Besides having prospects for acquisitive growth, Optimum Coal – already South Africa's sixth largest producer and the fourth largest exporter of thermal coal  from the Witbank coalfield region of Mpumalanga – there is potential for organic growth at Kwagga, which is extending to Kwagga North, Boschmanspoort, a new underground development that will be ramping up to four million tons a year, as well as Pullenhope and Eikeboom – all part of the current Optimum complex that has been brought to the JSE.

On the current rand-strength challenge, Teke said: "What we can control are safety, tons and cost and at this point in time Optimum is working hard to move from where we are. Our target is to go above 16 million tons of run-of-mine coal a year. The exchange rate is something we manage and watch closely, but there's nothing much that we can do about it. Over a period of two years, we believe that optimum will ramp up its export tonnage beyond six million tons," Teke added.

Optimum has a strong Richards Bay Coal Terminal shareholding of eight million tons, 6,5-million tons from Optimum and 1,5 -million tons from Koornfontein. Of the 9,3-million tons of coal that Optimum sold in 2009, four million tons were exported.

JSE business development director Noah Greenhill described the Optimum listing as "a fantastic way to start the year, with a nice big chunky listing. The message it sends to the South African resources sector is that you can raise capital in South Africa, and that there is an appetite here for appropriately priced assets.

"For the investor, the JSE has created a market that is efficient, hopefully liquid and trades on a world-class trading system. We are doing a lot of things to inculcate an investing, saving culture," he told Mining Weekly Online in a video interview.

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