David Brown
Photo by: Duane Daws
JOHANNESBURG (miningweekly.com) – The shares of triple-listed Coal of Africa Limited (CoAL) rose by more than 3% before noon on Friday following the company’s release of a quarterly update, which recorded a series of financial settlements, environmental go-aheads and project advances.
CoAL also announced the issuing of 20-million unlisted share options to Investec Bank at R1.32 a share as well as a spread of listed and unlisted share options for CEO David Brown, who is in the process of implementing plans that target the production of some seven-million tons of saleable coal a year, five-million tons of which is expected to be import-substituting price-premium hard coking coal used in steelmaking.
The project highlight of the latest quarterly update for the three months to December 31 was the completion by Sedgman of the front end engineering and design process for the Vele colliery, for which environmental authorisation has been received and a biodiversity offset agreement signed with the Department of Environmental Affairs and South African National Parks.
"The company has made significant progress... removing itself from a precarious position to one where it is better able to adjust and respond to market conditions," Investec Securities mining analysts said in a note.
CoAL plans to produce semi-soft coking coal and thermal coal from its brownfield Vele project in the short term, and both hard coking coal and thermal coal from its Makhado project and Greater Soutpansberg projects in the medium term and the long term.
The South Africa-focused company, which trades its shares in Sydney, London and Johannesburg, also reported the completion of the first two stages of its three-stage equity placement process, which has so far raised $46-million net of costs.
April 29 is the deadline for the final $14-million stage.
CoAL has brought to an end all of its outstanding liabilities and take-or-pay obligations with Grindrod and the Matola coal terminal in Mozambique until the end of 2016 and the company’s liability to diversified major Rio Tinto, for coal assets acquired in the Soutpansberg, has also been reduced by $6.2-million while discussions continue on the settlement of the remaining $23.5-million.
A payment of $5.8-million has settled the company’s working capital facility with Investec and an arbitration award of $1.4-million plus $1-million interest to Envicoal has put an end to the company’s last remaining significant legal matter.
The company said that applications for a new order mining right and water use licence for the proposed new Makhado project are being advanced through continued discussions with communities and government, and the option periods for the sale of both the Holfontein and Mooiplaas coal mines have been extended.
Following receipt of a further R2.5-million payment, Blackspear’s option on Mooiplaas has been extended to April and the Holfontein option to December.
After the settlement of liabilities, CoAL ended up with $20.6-million cash in hand.