Exxaro sells Coal Central operations to Overlooked Colliery
JSE-listed diversified miner Exxaro Resources has signed a definitive sale and purchase agreement with black-owned mining entity Overlooked Colliery for the Exxaro Coal Central (ECC) operations.
This while a disposal process is ongoing for the Leeuwpan coal mine.
The disposals follow the conclusion by Exxaro of an internal portfolio review to evaluate and optimise its current coal operations and projects.
The company had identified assets that are noncore to its future strategic objectives and decided to dispose of its total equity interest in ECC and Leeuwpan.
Exxaro soon after embarked on a divestment process of these assets, applying acquirer selection criteria including value maximisation, broad-based black ownership and sustainability of the new operator.
Overlooked is the operator of three coal mines in Mpumalanga. The company currently produces 2.4-million tonnes of coal a year and plans to reach 4.8-million tonnes a year by 2022 off its existing portfolio.
As part of the agreement, Overlooked will assume all of the rehabilitation liabilities of ECC, while Exxaro will retain all coal export entitlement through the Richards Bay Coal Terminal.
The transaction’s closure is now dependent on the finalisation of regulatory approvals, including with the Competition Commission and the Department of Mineral Resources and Energy.
Exxaro says Overlooked has procured funder confirmation and guarantees from Absa Bank and another South African bank for the transaction.
Exxaro expects the transaction to close only in the second half of 2021.
ECC comprises the Dorstfontein, Forzando and Tumelo operations, which each respectively comprise underground mines and some opencast mines.
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