JOHANNESBURG (miningweekly.com) − Emerging miner Coal of Africa Limited (CoAL) on Thursday raised $106-million (about R845-million or £66.3-million) in a share placement, which it would mainly use to bring the Vele colliery into production and to complete the acquisition of the Chapudi Coal project from Rio Tinto.
The miner, listed in Sydney, London and Johannesburg, said it placed 130-million new shares at 51p a share (about R6.50 a share) to raise the proceeds.
"We are delighted with the success of this capital raise against the backdrop of such highly volatile stockmarket conditions. We remain extremely positive about the prospects for our projects and now have significant funding in place to support their ongoing development," said CEO John Wallington.
Earlier on Thursday, CoAL said it planned to raise $100-million and that it had entered into a new $40-million revolving credit facility with JP Morgan. Drawdown on the new facility is conditional on the company raising at least $75-million in the placing.
The company would use $25-million of the placing proceeds to bring the Vele coking coal mine into production. Full operations resumed at the controversial colliery last month, after Water and Environmental Affairs Minister Edna Molewa approved an integrated water use licence.
CoAL was forced to stop activities at the Vele site last year, following noncompliance with the National Environmental Management Act.
“The last 12 months have been challenging for CoAL, but even set against this backdrop, we have achieved both core business stabilisation and growth. Our two operating assets produced more than four-million tons of thermal coal along with positive cash flows,” Wallington stated.
He said that the equity capital raise and the new credit facility would ensure that growth could be sustained.
The proceeds of the placing would be used for the $43-million payable on the completion of the Chapudi acquisition, which would consolidate the miner’s coking coal prospecting rights in the Soutpansberg coalfield in Limpopo.
CoAL also plans to spend $15-million on targeted exploration activities and a technical programme at Chapudi in order to advance preparation for new order mining right applications.
Some $17-million would be used for general working capital and corporate purposes, including $10-million to establish a financial guarantee for the Transnet Freight Rail account.