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Scinta buys South32’s Davel right for R187m

29th May 2017

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

     

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JOHANNESBURG (miningweekly.com) – Local coal miner Scinta South Africa will buy diversified miner South32’s 400-million-tonne Davel mining right, in Mpumalanga, for R187-million.

As part of the transaction, Scinta has also acquired the Ermelo Mines’ infrastructure, railway loop and discard dump. Certain historical liabilities related to the assets being acquired, have been assumed by Scinta as part of the agreed purchase price.

The Davel right holds export and Eskom grade coal, with an anticipated yield in excess of 80%. Once in production, the mine will benefit from the existing rail and handling infrastructure at Ermelo Mines, which will allow Scinta to produce at a significantly reduced all-in cost of production.

It is expected that Scinta will sustain a life-of-mine of over 50 years, during which time it is expected to produce at least five-million tonnes of saleable product a year.

Scinta also envisages that more than four-million tonnes of the existing discard dump at Ermelo Mines will be treated by it, with the product delivered to Eskom.

This will allow for early positive cash flow from the project.

Scinta director Sandile Zungu noted the company had worked for “some years” to put this important transaction to bed, and thanked South32 for its commitment to Scinta and perseverance on the transaction.

Scinta chairperson Humphrey Mathe added that the acquisition was not only significant for Scinta, but provided positive momentum for the South African mining sector’s transformative process.

“This transaction also bodes well for supply of coal to Eskom, which has indicated that its suppliers should be [more than] 50% black-owned.”

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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