TIDMCZA
RNS Number : 0714A
Coal of Africa Limited
15 March 2013
ANNOUNCEMENT 15 March 2013
REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2012
Commenting on Coal of Africa's performance for the six months
ended December 2012,
Mr John Wallington, Chief Executive Officer of Coal of Africa
Limited (CoAL), said: "The key development of this period was the
strategic partnership agreement signed with Beijing Haohua Energy
Resource Company Limited ("BHE") through the equity placement of
$100 million. The partnership with BHE has significantly
strengthened the financial structure of the company which will aid
in the development of CoAL's projects. The exchange of technical
and operational expertise will facilitate the growth and
development of CoAL and the coking coal industry in South
Africa."
Summary for the six months under review, reported unless
otherwise stated in United States Dollars, include:
-- Ten lost time injuries ("LTI's") during the period (FY2012
H2: five) including a vehicle incident at the Mooiplaats thermal
coal colliery ("Mooiplaats Colliery") in July 2012 where four
employees were injured.
-- 2,676,821 tonnes (FY2012 H2: 2,647,179 tonnes) of run of mine
("ROM") coal and 1,050,045 tonnes (FY2012 H2: 1,214,539 tonnes) of
export quality coal produced during the six months.
-- Reduction in export coal sales to 636,264 tonnes (FY2012 H2:
863,893 tonnes) due to the reduction in production volumes after
the strike action that lasted for six weeks at the Mooiplaats
Colliery, and the impact of tippler upgrades at the Matola Terminal
in Maputo, Mozambique ("Matola Terminal").
-- On-going pressure on index linked RB1 export quality thermal
coal prices which declined from an average of $100/tonne during the
six months ended 30 June 2012 to an average of $87/tonne for the
period ended 31 December 2012.
-- Sales of export quality coal on the domestic market during
the six months decreased 13.0% to 341,685 tonnes (FY2012 H2:
392,932 tonnes).
-- Sales of middling coal increased 25.9% from 375,768 tonnes in
the six months ended June 2012 to 473,154 tonnes for the December
2012 period. A new one year supply agreement was concluded with
Eskom Holdings Limited ("Eskom"), the South African state owned
electricity utility, for the supply of coal on improved terms.
-- Agreement concluded with Beijing Haohua Energy Resource
Company Limited's ("BHE") wholly-owned subsidiary, Haohua Energy
International (Hong Kong) Company Limited ("HEI"), to subscribe for
$100 million of CoAL shares at GBP0.25 per share. $20 million was
received during the period and $80 million was received post period
end.
-- Total gross equity capital raise of $53.5 million through a
placing of $44.8 million with institutional investors and an equity
derivative facility of $8.7million with Investec Bank Limited.
Woestalleen Complex - (Vuna colliery & Woestalleen
processing facility) - Witbank coal field (100%)
The Woestalleen processing facility recorded no LTI's (FY2012
H2: one LTI) and the Vuna colliery one LTI during the six months
(FY2012 H2: one LTI).
ROM coal produced by the Vuna colliery increased marginally in
the December 2012 period from 1,823,709 tonnes to 1,839,466 tonnes.
A portion of the #1 seam ROM coal mined at the colliery was
delivered to Eskom as raw coal and the remaining ROM coal processed
to an export grade and middlings product.
The quantity of coal processed decreased 17.4% to 1,306,009
tonnes compared to 1,581,896 tonnes during the previous six-month
period due to ROM coal sales to Eskom and scheduled December
shutdowns. Woestalleen produced 1,276,772 tonnes of saleable coal
(FY2012 H2: 937,934), up 36.1%, comprising:
-- 697,008 tonnes (FY2012 H2: 744,868 tonnes) of export quality coal, and
-- 579,764 tonnes (FY2012 H2: 193,066 tonnes) of middlings product.
The Vuna colliery's coal reserve is expected to be depleted by
the end of March 2013, at which time the supply of ROM coal to the
Woestalleen complex will cease. The Company continues to assess
various options to restructure the Woestalleen processing complex.
In the interim, the Company has engaged all stakeholders in a
section 189(A) process notifying the 274 affected employees of the
pending closure of the Vuna colliery and its impact on the
Woestalleen complex.
The Company also commenced a tender process for the sale of this
asset. Various offers have been received by the Company and are
being evaluated.
Mooiplaats Colliery - Ermelo coal field (100%)
Four of the eight LTI's recorded at the Mooiplaats Colliery
during the six months (FY2012 H2: two LTI's) resulted from an
incident involving a mine vehicle transporting employees. The focus
on improving safety management at the mine has intensified.
Operations at the Mooiplaats Colliery were temporarily suspended
at the end of September 2012 when the 176 National Union of
Mineworkers ("NUM") members, of the 368 people employed at the
colliery, embarked on a protected wage related strike. A wage
agreement was subsequently reached resulting in employees returning
to work on 1 November 2012. Access and operational capabilities at
the colliery were limited during the strike period resulting in the
flooding of two of the underground sections and production delays.
The Company commenced a section 189(A) process in relation to the
restructuring of the Mooiplaats Colliery on 6 November 2012.
On 3 December 2012, NUM-affiliated employees at the colliery
embarked on an unprotected strike protesting against the suspension
of four of their colleagues who had breached picketing rules and
the terms of a court interdict during the October strike. The
colliery's remaining 190 employees re-commenced work on 7 December
2012 and, on 11 December 2012 the NUM affiliated employees returned
to work.
The strike action at Mooiplaats was primarily responsible for
ROM production decreasing by 41.4% to 388,100 tonnes (FY2012 H2:
662,363 tonnes) while coal processed declined from 804,125 tonnes
in H2 FY2012 (including 146,746 tonnes of purchased ROM coal) to
387,767 tonnes. The colliery produced a total of 270,234 saleable
tonnes (FY2012 H2: 556,801 tonnes) during the period,
comprising:
-- 226,719 tonnes (FY2012 H2: 423,605 tonnes) of export quality coal; and
-- 43,515 tonnes (FY2012 H2: 133,196 tonnes) of middlings product for Eskom.
As part of the initiative to address the long term viability of
the operation, the Company is assessing various strategic
restructuring alternatives which may include disposal.
Following the derailment on the Matola Corridor ("the
derailment") on 18 February 2013, production at Mooiplaats will
continue until stockpile capacity is reached.
Vele Colliery - Tuli coal field (100%)
The Vele coking and thermal coal colliery ("Vele Colliery")
recorded one LTI during the six months (FY2012 H2: nil LTI's) and
achieved 1,000 fatality-free production shifts during the reporting
period.
During the period, Vele continued to produce export grade
thermal coal to offset costs while the test trials on potential
metallurgical coal are being concluded. Vele produced 449,255
tonnes (FY2012 H2: 161,107 tonnes) of ROM coal and 438,501 tonnes
(FY2012 H2: 162,289 tonnes) of coal was processed during the period
yielding 126,318 tonnes (FY2012 H2: 46,066 tonnes) of saleable
export quality thermal coal.
The intended plant expansion at Vele will result in improved
yields and operational efficiencies.
The plant expansion has been divided into two phases:
-- Phase 1 will allow for the de-watering of the ultra-fines
product by installing filter presses eliminating the need for the
temporary slurry pond and is scheduled for completion early in the
second quarter of CY2013.
-- Phase 2 construction is expected to commence in CY2013 and be
completed in the second half of CY2014. The approval of Vele Phase
2 by the board is subject to the completion of product testing
currently underway. This phase includes the installation of a
permanent ROM tip and crushing facility, primary & middlings
coal wash plant modules as well as a fines recovery plant.
The Vele Colliery Environmental Management Committee ("EMC") and
sub-committees are operating effectively and comprise
representatives from the relevant government departments,
non-governmental organisations, municipalities, farming communities
and other stakeholders. During the period the Save Mapungubwe
Coalition joined the EMC as full members.
Production at Vele Colliery has been temporarily suspended
following the derailment primarily to reduce operating cash costs
during this period and the lack of stockpile capacity.
Makhado Coking Coal Project - Soutpansberg coal field (100%)
On 15 March 2013 the Company confirmed that the Makhado coking
and thermal coal project ("Makhado Project") has the potential to
produce a hard coking coal. The Company engaged Wood Mackenzie, who
are leading independent experts in coal sales to verify the
expected product quality and marketability of the coal. Following
completion of their work Wood Mackenzie confirmed the typical
quality of the coal at Makhado to be hard coking coal based on its
specifications relative to other international coking coal
producers. The consideration was based on the global outlook for
coking coal and the coal quality parameters that contribute to
Makhado's value-in-use in order to estimate the attractiveness of
the coal in selected target markets. These markets are closely
aligned to the key growth destinations for seaborne coking
coal.
During the interim period the Makhado Project Definitive
Feasibility Study ("DFS") on the opencast mining area, which
includes both hard coking coal and a thermal coal fraction, was
upgraded to provide greater operational certainty and reduced
project risk. The Company expects that the additional work on the
DFS will be completed and released during Q2 CY2013.
CoAL continued to make progress on the acquisition of various
properties required for the Makhado Project rail infrastructure and
operations. The Company purchased or has an option to acquire the
remaining properties required for the rail load-out and rail spur
for the Makhado project. Negotiations to acquire the two properties
where the planned processing plant and initial opencast mining is
to commence have not been concluded. The granting of the Makhado
Project New Order Mining Right ("NOMR") will result in CoAL having
legislated rights in terms of the Mineral and Petroleum Resources
Act (2002) allowing the construction of the mine and related
infrastructure to commence.
During the period, the Company and the Nzhelele Farmers signed a
Memorandum of Agreement ("MOA") in respect of the more efficient
use of water in the Nzhelele River catchment area of Limpopo
Province, South Africa. The signing of the MOA enabled the
submission of the Makhado Project Integrated Water Use Licence
Application. Under the terms of the MOA, the Nzhelele Farmers
relinquished portions of their water-use entitlements facilitating
a bulk water supply for the Makhado Project. The parties have
undertaken to form a technical working group with the aim of
identifying projects which would replenish the allocation
relinquished by the farmers.
The Company has made significant progress on the regulatory
requirements relating to the NOMR Application. The BEE
shareholding, required under South African mining legislation is
work in progress as the Company needs to ensure that funding is a
requirement in order to progress the project. It is envisaged a BEE
partner will provide a pro rata share of funding required to
develop the project.
Greater Soutpansberg Project - Soutpansberg Coalfield (74%)
The Company has commenced with the work necessary to submit NOMR
Applications for the Chapudi, Mopane and Makhado Extension
projects. During the period under review CoAL continued with the
process of compiling the exploration and technical data on these
projects. The Company initiated exploration programmes on the
properties in early CY2013 and a total of 39 small and 42 large
diameter holes are planned to be drilled over the next six months,
with further updates on the technical results to follow in due
course.
Rio Tinto Chapudi coal asset acquisition
The share purchase agreement to acquire the Rio Tinto Chapudi
coal assets was amended to enable the sale of equity and of
shareholders' claims, totalling $75.0 million, to close separately.
The Company was able to restructure the payment terms and paid
$9,634,740 of the shareholder claims portion during the reporting
period and the outstanding $4 million for these claims was paid in
February 2013. The $30.0 million balance of the total purchase
price will become payable on the earlier of the receipt of a NOMR
on any of the properties that form part of the transaction or, two
years from 11 May 2012, the date upon which the conditions
precedent for the equity sale were fulfilled.
Strategic Partner - Beijing Haohua Energy Resource Co.
Limited
At the end of September 2012, BHE through its subsidiary HEI
submitted a binding offer to provide the Company with $100.0
million of equity funding with the transaction to be executed in
two stages:
-- an initial placement of $20.0 million, completed during the reporting period; and
-- a conditional placement of $80.0 million ("Conditional Placement").
All necessary Peoples Republic of China ("PRC"), CoAL
shareholder, regulatory and statutory approvals required for the
Conditional Placement were satisfied in January 2013 and HEI
subscribed for a further $80.0 million of shares in CoAL at GBP0.25
per share. The parties have commenced discussions regarding
co-operation on commercial, technical and operational matters
enabling the Company to draw on BHE's expertise during the
development of the Makhado Project as well as the Chapudi, Mopane
and Makhado Extension projects.
Equity Issue
During the period the Company raised a total amount of $53.5
million (before costs) of which 115,478,798 shares were placed with
institutional investors at GBP0.25 per share raising $44.8 million
and Investec Bank Limited subscribed for 19,148,408 million CoAL
shares under an equity derivative financing package raising
approximately $8.7 million. At the end of the period, approximately
$4.3 million of this facility was outstanding.
Financial review (all amounts expressed in US Dollars unless
stated otherwise)
Revenue from the sale of coal for the six months totaled $87.3
million compared to $125.8 million for the comparative period due
to lower coal prices and reduced production as a result of the
strike action and subsequently, lower sales volumes.
The loss for the six months under review amounted to $111.7
million, or 14.39 cents per share compared to a loss of $74.7
million or 13.36 cents per share for the prior corresponding
period.
The loss for the period under review of $111.7 million (2011:
$74.7 million) includes non-cash charges of $98.3 million (2011:
$70.3 million) as follows:
-- impairment loss of $50.0 million ($1.9 million in the six months ended 31 December 2011);
-- net foreign exchange losses of $21.6 million (2011: $42.6
million) of which $22.1 million (2011: $39.9 million) represent
unrealised losses arising from the translation of inter-group loan
balances, borrowings and cash due to change in the South African
Rand:United States Dollar exchange rate period on period;
-- depreciation of $9.8 million (2011: $8.5 million) and
amortisation of $9.4 million (2011: $20 million) contributed
further to the non-cash charges;
-- loss of $2.7 million due to the discount on early settlement
of the Grindrod receivable (2011: nil);
-- loss of $4.3 million (2011: nil) on the fair value adjustment
of the Investec equity derivative financing package.
The increase in the loss for the six months when compared to the
prior corresponding period is as a result of a $50.0 million
impairment loss recognized on Mooiplaats ($1.9 million in the six
months ended 31 December 2011 on assets held for sale).The
impairment loss arose from the following factors:
-- continued losses suffered at the operation on a monthly basis
due to lower coal prices and production targets not met;
-- strike action during the month of September 2012 resulting in lower production volumes; and
-- relatively higher logistics cost applicable to this colliery.
The above mentioned resulted in a headline loss per share of (as
explained in note 10 to the financial report) to 7.95 cents per
share during the six months under review from 13.02 cents per share
in the prior corresponding period, due to the exclusion of
impairment losses from the calculation on a headline basis.
As at 31 December 2012, the Company had cash and cash
equivalents of $18.3 million compared to cash and cash equivalents
of $19.5 million at 30 June 2012.
As at 31 December 2012, the available facility with Deutsche
Bank totalled $37.5 million The actual utilisation of the facility
as at this date was $37.5 million. The facility is subject to
certain covenants associated with a facility of this nature. As a
result of the strike action in October 2012 at the Mooiplaats
Colliery and the subsequent loss in production together with the
unrealised loss associated with the loan in the books of Langcarel
(Pty) Ltd (a wholly owned subsidiary of the Company), the total
equity measure fell below the set equity covenant threshold. Notice
of this breach was communicated to Deutsche Bank and the Company
considers that this breach has not resulted in any change to the
ability of the Company to meet its repayment obligations.
Highlights and events after the reporting period
-- Confirmation of Makhado coal as a world class hard coking
coal with good coke strength. Wood Mackenzie who were engaged to
review the coal to be produced at the Makhado Project have
confirmed that it has the potential to be a world class hard coking
coal.
-- Memorandum of Understanding ("MOU") signed appointing Vitol
as the Company's marketing agent for all export thermal and coking
coal for eight years, except for Makhado product where the
marketing period is five years from start of production. The MOU
excludes all current agreements and potential coal off-take
arrangements with the Company's strategic equity partners.
-- Agreement with Grindrod to remove CoAL's funding obligation
for the Phase 4 expansion of the Matola Terminal. Additional
throughput volumes will be contracted for on a take-or-pay
basis.
-- PRC regulatory approval for HEI's $100.0 million investment
in the Company and CoAL shareholder approval of the transaction
resulting in the Company receiving $80.0 million on 31 January 2013
from HEI and the issuance of 247,417,599 CoAL shares.
-- Heavy rainfall and resultant flooding resulted in the
stoppage of operations at the Vele Colliery. Limited operations
re-commenced with production returning to normal levels during the
first week of February 2013.
-- The derailment of 10 wagons on the Maputo rail corridor on 18
February 2013 led to the damage of a rail bridge resulting in the
suspension of all traffic between Komatipoort and Maputo, until
approximately the end of March 2013.Transnet Freight Rail has been
unsuccessful in establishing alternative routes to the Port of
Matola. Accordingly Vele, Mooiplaats and Woestalleen collieries
issued force majeure notices to their customers, contractors and
affected stakeholders. The Company has implemented measures at all
operations to mitigate the commercial and operational impact of the
force majeure. Although Vele operations were temporarily suspended
primarily to reduce operating cash costs during this period and the
lack of stockpile capacity production at Mooiplaats and Woestalleen
will continue until the stockpile capacity has been fully
utilized.
-- Repayments to Deutsche Bank continues in the normal course of
business with $8.3 million being repaid during January and February
2013, bringing the total outstanding facility to $29.2 million and
the cash balance as at 28 February 2013 to $72.6 million.
Outlook
The Company is considerably better placed following the
strategic investment by BHE however certain elements of the
turnaround strategy remain work in progress. These include possible
restructuring or sale of Mooiplaats colliery, Woestalleen colliery
and related assets. The Company is also continuing discussions with
various financial institutions to secure new short and long term
debt facilities. In addition finalisation of the Vele coal product
trials is required in order to complete the phase two capital
programme.
Corporate Activity
As part of the Company's drive to reduce overhead costs and the
closure of its Perth and London offices, Mr Tony Bevan was
appointed Company Secretary of CoAL. Mr Bevan works for Endeavour
Corporate Pty Ltd based in Perth, Australia, which has been engaged
to provide company secretarial services to CoAL. Mr Bevan is a
Chartered Accountant with over 25 years' experience and is an
experienced company secretary.
Webcast
Management will provide further insight on the Interim Results
via a simultaneous webcast and conference call at 11h00(CAT) on 15
March 2013.
The simultaneous webcast and conference call will be accessible
on http://themediaframe.eu/links/coalofafrica130315.html or CoAL's
website at www.coalofafrica.com.
Teleconference
Australia (Toll-free) 1 800 350 100
Other countries (International toll) +27 11 535 3600
Other countries (Alternative) +27 10 201 6616
South Africa (Toll-free) 0800 200 648
South Africa (Johannesburg) 011 535 3600
South Africa (Johannesburg Alternative) 010 201 6800
UK (Toll-free) 0808 162 4061
USA and Canada (Toll-free) *0 for operator 1 800 921 0864
PLAYBACK
A playback of the teleconference will be available for 48 hours
afterwards on the following telephone numbers:
South Africa (Telkom) 011 305 2030 Code: 23654
USA and Canada (Toll) 412 317 0088 Code: 23654
Other countries (Toll-free) 0808 234 6771 Code: 23654
AUTHORISED BY:
John Wallington
Chief Executive Officer
For more information contact:
+27 11 575
David Brown Chairman Coal of Africa 4363
Chief Executive +27 11 575
John Wallington Officer Coal of Africa 4363
+27 11 575
Sakhile Ndlovu Investor Relations Coal of Africa 6858
Endeavour Corporate +61 08 9316
Tony Bevan Company Secretary Services 9100
Company advisors:
Jos Simson/Emily Financial PR (United +44 20 7920
Fenton Kingdom) Tavistock 3150
Investec Bank +44 20 7597
Chris Sim/Neil Elliot Nominated Adviser plc 5970
Charmane Russell/James Financial PR (South Russell & Associates +27 11 880
Duncan Africa) 3924 or
+27 82 372
5816
Investec Bank Limited is the nominated JSE Sponsor
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 Greater
Soutpansberg Project, including CoAL's Makhado Project (coking
coal) and the Mooiplaats and Woestalleen Collieries (both thermal
coal).
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGGGDXBXBBGXU
Coal of Africa (LSE:CZA)
Historical Stock Chart
From Sep 2024 to Oct 2024
Coal of Africa (LSE:CZA)
Historical Stock Chart
From Oct 2023 to Oct 2024