JOHANNESBURG (miningweekly.com) – JSE-listed Wescoal’s shares rose 17% on Wednesday after the company announced that it had signed a long-term coal supply agreement (CSA) with Eskom for the Elandspruit colliery.
“This brings to fruition a major project for the Wescoal team. This long-term position significantly de-risks future cash flows and in the short to medium term enables us to repeat the results achieved during the second half of the 2016 financial year,” CEO Waheed Sulaiman said.
The Elandspruit colliery, which produced first coal in July 2015, has been supplying coal to Eskom through short-term contracts since September 2015.
The new five-year CSA will start on November 1, when the colliery’s current short-term coal supply contract with Eskom ends. Some 7.8-million tons of coal will be beneficiated at Wescoal’s processing plant over the five-year period.
Under the terms of the CSA, Wescoal is required to increase its black economic-empowerment ownership to more than 50% by December 2016 – a target the company says it is well advanced in achieving.