Coal of Africa Limited Mining Right granted for the Makhado Project (3762N)
May 18 2015 - 2:00AM
UK Regulatory
TIDMCZA
RNS Number : 3762N
Coal of Africa Limited
18 May 2015
ANNOUNCEMENT 18 May 2015
Mining Right granted for the Makhado Project
Coal of Africa Limited ("CoAL" or "the Company") is pleased to
announce the granting by the South African Department of Mineral
Resources ("DMR") of a New Order Mining Right ("NOMR") in terms of
the Mineral and Petroleum Resources Development Act (Act 28 of
2002) for its flagship Makhado hard coking and thermal coal project
in Limpopo Province. The DMR also granted the Section 11 approval
transferring the right from CoAL to its wholly owned subsidiary
Baobab Mining & Exploration (Pty) Ltd ("Baobab"), which will be
the project development company.
CoAL completed a Class II Definitive Feasibility Study on the
Makhado Project ("Makhado" or the "Project") during 2013 and
anticipates developing the colliery to produce 2.3 million tonnes
per annum ("Mtpa") of hard coking coal and a further 3.2 Mtpa of
thermal coal over a 16 year life of mine. The project can produce
hard coking coal that has been benchmarked by independent
consultants. Tests confirmed that the coal can be successfully
beneficiated to produce high strength coke for the steel
manufacturing industry.
Following the granting of the Section 11 approval, the Makhado
Colliery Community Development Trust (the "Trust") representing
seven local communities living in the vicinity of the project will
acquire a 20% interest in Baobab. A further 6% interest in Baobab
has been acquired by Yoright Investments (Pty) Ltd ("Yoright")
formed by black entrepreneur Mike Nkuna whose shareholder grouping
will include other Historically Disadvantaged South Africans. The
Trust and Yoright have two years to raise sufficient funding to
acquire their interests in Baobab with the final amount payable
subject to due diligence which will be negotiated with the Company.
The completion of the acquisition transactions will result in the
Trust owning 20%, Yoright 6% and CoAL 74% of Baobab.
The Company has initiated discussions with potential customers
following the granting of the NOMR, which is a critical step in the
process to secure off take agreements for the coal products. The
granting of the NOMR is also an important step towards sourcing the
funding required to develop the Makhado Project, where construction
is expected to begin in H1 CY2016. CoAL anticipates that
construction will take 26 months with a further four month ramp-up
phase by which time the project will produce 5.5 Mtpa of saleable
product.
David Brown, Chief Executive Officer of CoAL, commented:
"The granting of the mining right is a significant milestone for
CoAL as it allows the Company to proceed towards developing
Makhado, its flagship project. It is an important vote of
confidence in the economic potential of the Project, not only for
the region, but also for the Limpopo province. As soon as
development starts at Makhado a meaningful contribution will be
made to the growth and development goals of the province, improving
the socio-economic environment of the communities in the area of
operation. CoAL looks forward to a successful working relationship
with its partners in the area.
"Makhado's capacity to produce hard coking and thermal coal
alongside its close proximity to underutilised rail infrastructure
ensures its role as a potential domestic and/or export supplier.
The level of production from the Project has the potential to
stimulate domestic industrialisation once it reaches full capacity.
CoAL awaits the approval of the Integrated Water Use Licence from
the Department of Water and Sanitation, and will continue to engage
with the Department in this regard."
Authorised by
David Brown
Chief Executive Officer
18 May 2015
For more information contact:
Chief Executive +27 10
David Brown Officer Coal of Africa 003 8000
+27 10
Celeste Riekert Investor Relations Coal of Africa 003 8000
Endeavour
Corporate +61 08
Tony Bevan Company Secretary Services 9316 9100
Company advisors:
Financial
Jos Simson/Emily PR (United +44 20
Fenton Kingdom) Tavistock 7920 3150
Chris Sim/George
Price/Jeremy Nominated Investec Bank +44 20
Ellis Adviser plc 7597 5970
Charmane Russell/Jane Financial Russell & +27 11
Kamau PR (South Associates 880 3924
Africa) or
+27 82
372 5816
Investec Bank Limited is the nominated JSE Sponsor
About CoAL:
CoAL is an AIM/ASX/JSE listed coal exploration and development
company operating in South Africa. CoAL's key projects include the
Vele Colliery (coking and thermal coal), Makhado Project (coking
and thermal coal) and the Greater Soutpansberg Project
/MbeuYashu.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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