TIDMCZA
RNS Number : 2092R
Coal of Africa Limited
01 November 2011
ANNOUNCEMENT 1 NOVEMBER 2011
REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2011
"Significant progress made", says CoAL CEO
Coal of Africa Limited ("CoAL" or "the Company" and together
with its subsidiaries "the Group") provides its operational report
for the quarter ended 30 September 2011. A copy of this report is
available on the Company's website, www.coalofafrica.com.
Highlights
-- Environmental Authorisation ("EA") for the Vele coking coal
colliery ("Vele Colliery") granted on 5 July 2010, enabling the
Company to recommence limited construction and mining activities
from 4 August 2011.
-- Suspension of the Vele Colliery Integrated Water Use Licence
("IWUL") lifted by the South African Minister of Water and
Environmental Affairs ("the Minister") and full operations
commenced on 19 October 2011.
-- Memorandum of Agreement ("MoA") signed with the South African
Department of Environmental Affairs ("DEA") and South African
National Parks ("SANParks") and seeks to ensure the conservation
and integrity of the globally significant natural and cultural
heritage site and to maintain and strengthen co-operation between
the parties.
-- 1,199,902 tonnes (FY2011 Q4: 1,256,825 tonnes) of run of mine
("ROM") and 652,060 tonnes (FY2011 Q4: 664,865 tonnes) of export
quality coal produced at the Woestalleen thermal coal complex
("Woestalleen") and the Mooiplaats thermal colliery
("Mooiplaats").
-- Sales of export coal decreased from 492,781 tonnes in the
June 2011 quarter to 277,499 tonnes in the September 2011 quarter
due to generally slower market conditions and the timing of
deliveries over the quarter end. Sales are scheduled to return to
normal levels in the December quarter.
-- Improved yield and production at Mooiplaats together with the
change from a contract mining to an owner-managed operation.
-- Commissioning the fifth underground section at Mooiplaats during September 2011.
-- Irrevocable undertakings signed by vendor shareholders and
the time period to obtain regulatory approvals extended in the
acquisition of the Chapudi Coal Project from Rio Tinto Minerals
Development Limited ("Rio Tinto") and Kwezi Mining (Proprietary)
Limited ("Kwezi").
-- Full Mineral Experts Report published today within a
Registration Document, also including information on the Group, its
assets and projects and regulatory, operating and financial
information.
-- Total cash balance and available facilities as at 30 September 2011 of US$28.9 million.
Commenting today, Mr John Wallington, Chief Executive Officer of
CoAL said: "Steady progress has been made by Coal of Africa, not
least of which was the lifting of the suspension on the IWUL at
Vele allowing the resumption of operations to bring the mine into
production. The signing of the MoA with the DEA and SANParks
signified a further strengthening of our working relationship with
government and our commitment to all our stakeholders. Importantly,
teams are back on site and the process of re-employing people has
commenced. During the initial phase of mining operations, the mine
is planned to ramp up to 2.7Mtpa ROM coal and 1.0Mtpa saleable coal
and create up to 500 jobs.
During the September quarter, the transition of Mooiplaats from
a contract mining to an owner managed operation progressed
satisfactorily. Quarter on quarter, the colliery reported a 29%
increase in run of mine coal production and a 3% increase in
overall yield. The commissioning of a fifth underground section
during September 2011 will facilitate further increases in
production and optimise the installed processing plant capacity at
the colliery. During the quarter, Woestalleen performed in line
with expectation with the Vuna Colliery extending its exemplary
safety record with no lost time injuries recorded."
QUARTERLY COMMENTARY
Woestalleen Complex - Witbank Coalfield (100%)
The Woestalleen Complex consisting of the Vuna Colliery ("Vuna")
and three beneficiation plants continued the outstanding safety
record with no single lost time injury recorded since commencing
operations in 2008. Regrettably, two lost time injuries were
recorded at the Woestalleen processing plant during the quarter,
and management continues to focus on safety as a critical area of
the business.
In the September quarter, production at Woestalleen was from
Vuna only due to the depletion of Hartogshoop in the previous
quarter. Total ROM production for the quarter of 898,114 tonnes,
was 7.4% lower than the June quarter of 970,220 tonnes.
The Woestalleen wash plants produced 470,482 tonnes (FY2011 Q4:
503,625 tonnes) of export quality coal and a further 108,648 tonnes
(FY2011 Q4: 73,265 tonnes) of lower grade product for Eskom Limited
("Eskom"), the South African electricity utility.
The overall yield of 63.4% (FY2011 Q4: 64.5%) was marginally
lower than the previous quarter due to the change in mix with the
Vuna providing 100% of the feed to the plant as mentioned
above.
Mooiplaats Colliery - Ermelo Coalfield (100%)
The transition to an owner managed mine at the end of June 2011
facilitated direct management of the operation, following which
there has been an improvement in overall performance. Coal
production increased by 28.6% to 301,788 ROM tonnes from 234,655
ROM tonnes in the June quarter (excluding 51,950 of ROM waste
tonnes). A fifth underground section was commissioned in September
2011 and is expected to reach optimum production during the second
quarter of the current financial year.
Coal processed during the three months to September 2011
declined marginally to 317,709 ROM tonnes from 321,105 ROM tonnes
during the June quarter. A total of 181,578 tonnes (FY2011 Q4:
161,240 tonnes) of export quality coal was produced and 32,420
tonnes (FY2011 Q4: 44,348 tonnes) of the lower grade product for
Eskom.
Reduction in ROM contamination due to better mining controls
resulted in yields improving from 64.0% in the June quarter to
67.4% in the September quarter.
Safety at Mooiplaats continues to be a focus area with three
lost time injuries reported at the mine during the September
quarter (FY2011 Q4: four lost time injuries).
Marketing and Logistics
The slower international market for export thermal coal resulted
in delays in shipments under term agreements for planned shipments
during the quarter. Operational delays at the terminal at quarter
end resulted in the loading of a vessel being delayed into the
December quarter. These factors resulted in stock at the Matola
Terminal increasing to 220,000 tonnes at 30 September 2011.
Subsequently, shipping levels have returned to normal levels, with
additional cargoes scheduled in the December quarter and stock
levels expected to normalise by calendar year end.
A total of 64,399 tonnes of third party coal (FY2011 Q4: 40,298
tonnes) was purchased during the quarter, contributing to the
277,499 tonnes of export quality coal sold (FY2011 Q4: 492,781
tonnes).
Woestalleen sold 276,171 tonnes (FY2011 Q4: 264,813 tonnes) and
Mooiplaats 41,254 tonnes of coal (FY2011 Q4: 63,233 tonnes) to
domestic customers during the quarter and 90,344 tonnes (FY2011 Q4:
39,460) of middlings coal from Woestalleen and 30,838 tonnes
(FY2011 Q4: 69,242 tonnes) from Mooiplaats, was purchased by
Eskom.
Summary tables (tonnes)
Woestalleen Mooiplaats Total
September 2011 quarter
------------ ----------- ----------
ROM production 898,114 301,788 1,199,902
------------ ----------- ----------
ROM coal purchased - - -
------------ ----------- ----------
Total coal processed 913,896 317,709 1,231,605
------------ ----------- ----------
Overall Yield 63.4% 67.4% 64.4%
------------ ----------- ----------
Total coal produced 579,130 213,998 793,128
------------ ----------- ----------
Export coal 470,482 181,578 652,060
Middlings coal 108,648 32,420 141,068
------------ ----------- ----------
Saleable coal purchased - 64,399 64,399
------------ ----------- ----------
Total coal sales 366,515 349,591 716,106
------------ ----------- ----------
Export - 277,499 277,499
Inland 276,171 41,254 317,425
Eskom 90,344 30,838 121,182
------------------------- ------------ ----------- ----------
Vele Colliery
During the quarter, significant progress was made on various
regulatory matters impacting the Vele Colliery. Following receipt
of the EA for Veleon 5 July 2011, and the subsequent appeal against
the granting of the IWUL resulting in the suspension of the IWUL by
operation of law, limited operations not requiring the use of water
commenced on 4 August 2011. These activities included grading all
access roads onto site, undertaking all electrical repairs and
construction at the coal handling and processing plant.
On 8 August 2011, CoAL lodged an urgent petition requesting the
Minister, in terms of the National Water Act No 36 of 1998 ("the
Act"), to exercise her discretion to allow the IWUL to remain in
full force and effect pending the appeal to be heard by the Water
Tribunal. After taking into consideration all relevant facts
including the appeal to the Water Tribunal, in terms of Section 148
(2)(b) of the Act the Minister lifted the suspension on 18 October
2011.
All activities required to complete construction of the mine and
plant and to commence full mining operations at Vele, resumed on 19
October 2011.
During the September quarter, the Company, DEA and SANParks
unveiled a historical MoA in respect to the Mapungubwe Cultural
Landscape World Heritage Site ("Heritage Site"). The MoA was
concluded pursuant to conditions set out as part of the EA and
seeks to ensure the conservation and integrity of the globally
significant natural and cultural Heritage Site and to maintain and
strengthen co-operation between CoAL, SANParks and the DEA.
The signatories to the MOA have committed themselves to ten
joint undertakings, including:
-- developing means by which local communities and other
stakeholders can participate in and tangibly benefit from the
management and sustainable use of the Heritage Site's natural and
cultural resources;
-- developing detailed biodiversity offset programs and action plans;
-- monitoring the implementation of these through a steering or
environmental management committee; and
-- providing adequate financial, human and other resources for their effective implementation.
The additional Heritage Impact Assessment as required by the
United Nations Educational Scientific and Cultural Organization
(UNESCO) and the DEA commenced during the quarter and is expected
to be completed during the quarter ending 31 December 2011.
Makhado Coking Coal Project
During the September quarter, independent experts continued with
the baseline social and environmental studies required for the
Makhado Project New Order Mining Right ("NOMR") application. The
consultation process with interested and affected parties continued
during the period, including the involvement of various government
departments.
The Definitive Feasibility Study ("DFS") is in the final stages
of review with all phases of design work and reports complete.
Discussions to finalise an off-take agreement with ArcelorMittal
South Africa Limited are underway and is expected to be concluded
in the near term, following which all project documents will be
tabled for approval by the CoAL Board. Feedback from other
potential customers who have received product samples is expected
during the next quarter.
By 30 September 2011, comments from the various interested and
affected parties on the Environmental Impact Assessment,
Environmental Management Plans and IWUL submissions, had been
received. The IWUL Technical and Engineering report is expected to
be submitted to the DEA during the December quarter.
Acquisition of Rio Tinto's South African Assets
During the September quarter, the Company secured irrevocable
undertakings from the vendor shareholders in terms of the Sale and
Purchase Agreement ("SPA") for the acquisition of Rio Tinto's
Chapudi Coal Project and related exploration properties
(collectively, the "Coal Assets") in South Africa's Soutpansberg
Coalfield in the Limpopo Province. The date for the fulfilment of
the suspensive conditions in the SPA has been extended from 12
August 2011 to 30 April 2012, to allow for obtaining the remaining
regulatory approvals required, including Ministerial consent in
terms of section 11 of the Mineral and Petroleum Resources
Development Act, for the acquisition of the Coal Assets.
The Company is in the process of mobilising the exploration
teams and finalizing the exploration programme for the various
properties, which is expected to further increase the resource base
and unlock the potential value from these assets.
The transaction consolidates various tenements and will make
CoAL a substantial holder of coking coal New Order Prospecting
Rights in the Soutpansberg Coalfield when completed.
Cash and Available Facilities
At 30 September 2011, total cash on hand and call deposits was
US$8.8 million (FY2011 Q4: US$22.8 million) and undrawn loan
facilities and standby credit arrangements was US$20.1 million
(FY2011 Q4: US$17.5 million). Quarter on quarter, total cash and
available facilities remained in line with management
expectations.
As noted in the Group's financial statements for the 2011
Financial Year published on 19 September 2011, the Group has a
continuing need for further capital for the exploration,
development and continuing operation of its projects, including
completion of the Chapudi acquisition from Rio Tinto/Kwezi. The
Directors are pursuing a number of sources of funding and are at an
advanced stage of negotiation for a new US$40 million debt facility
and remain confident of securing further financing. The Group is
committed to the sale of certain of its assets, including NiMag and
the Holfontein Project. The Directors are confident of completing
the sale on one or both of these assets within the next 12 months,
realising further cash resources for the Group.
Corporate Activity
As previously announced, the Group is committed to moving from
its current AIM listing to the Main Market of the London Stock
Exchange and, in connection with that and as a result of the
Company being deemed to be tax resident in South Africa
notwithstanding its incorporation in Australia, the Group is also
proposing to carry out a restructuring of the Group in the next 12
months.
In connection with these proposed activities, the Group has
today published a Registration Document prepared in accordance with
the Prospectus Rules published by the United Kingdom Financial
Services Authority ("FSA") made under section 73A of the United
Kingdom Financial Services and Markets Act (2000) ("FSMA"), which
also includes an overview of the proposed Group restructuring. The
Registration Document which has been approved by the FSA in
accordance with Section 87A of the FSMA and contains a full Mineral
Experts Report prepared by Venmyn Rand (Pty) Ltd, which includes
details of all the Group's current projects and the revised
resources and reserves estimates set out in the Independent
Technical Statement released by the Company as part of the
technical update on 18 September 2011.
In addition, the Registration Document includes a detailed
description of the Group, its directors, and its projects and
licences as well as the regulatory environment in which it operates
in South Africa, including Black Economic Empowerment. The
Registration Document also sets out the material risks which face
the Group, operating and financial information on the Group for the
three years ended 30 June 2009, 2010 and 2011 reported under
International Financial Reporting Standards (as adopted by the
European Union) and its future funding requirements. The
Registration Document and Mineral Experts Report are available on
the company's website www.coalofafrica.com.
Authorised by
JOHN WALLINGTON
Chief Executive Officer
31 October 2011
For more information contact
John Wallington Chief Executive Officer Coal of Africa +27 11
575 4363
Wayne Koonin Financial Director Coal of Africa +27 11 575
4363
Shannon Coates Company Secretary Coal of Africa +61 893 226
776
Chris Sim/Romil Patel/Jeremy Ellis Nominated Adviser
Evolution Securities +44 20 7071 4300
Jos Simson/Emily Fenton Financial PR (United Kingdom) Tavistock
+44 207 920 3150
Melanie de Nysschen/ Annerie Britz/ JSE Sponsor Macquarie +27 11
583 2000
Yvette Labuschagne
Charmane Russell/James Duncan Financial PR (South Africa)
Russell &
Associates +27 11 880 3924
+27 82 372 5816
www.coalofafrica.com
About CoAL:
CoAL is an AIM/ASX/JSE listed coal exploration, development and
mining company operating in South Africa. CoAL's key projects
include the Vele Colliery (coking and thermal coal), the Makhado
Project (coking coal) and the Mooiplaats and Woestalleen Collieries
(both thermal coal).
The Mooiplaats Colliery commenced production in 2008 and is
currently ramping up to produce 2 Mtpa. The Woestalleen Colliery,
acquired through the acquisition of NuCoal Mining (Pty) Limited in
January 2010, currently processes approximately 2.5Mtpa of saleable
coal for domestic and export markets. The Woestalleen Complex also
incorporates three beneficiation plants with a total processing
capacity of 350,000 run of mine feed tonnes per month.
CoAL's Vele Colliery is expected to start production in Q1 2012.
During the initial phase, the operation is targeting 2.7 Mtpa ROM
production to produce 1.0Mtpa of saleable coking coal. The Makhado
Project, CoAL's flagship project in the Soutpansberg coalfield, is
well into the feasibility stage, with a Definitive Feasibility
Study nearing completion. An application for a New Order Mining
Right for the Makhado Project was submitted in January 2011.
In November 2010, CoAL agreed to acquire the Chapudi coal
project and several other coal exploration properties in the
Soutpansberg coal basin in South Africa from the previous owners,
including Rio Tinto. Upon completion, the acquisition of these
projects will significantly extend the scale and scope of certain
of CoAL's existing projects in the region and will more than double
the resource of the existing Makhado Project.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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