TIDMCZA
RNS Number : 9401D
Coal of Africa Limited
30 October 2015
ANNOUNCEMENT 30 October 2015
REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2015
Potential Strategic Investor in Makhado Identified
Coal of Africa Limited ("CoAL" or "the Company") which operates
in South Africa, together with its subsidiaries, hereby provides
its update for the quarter ended 30 September 2015. All figures are
denominated in United States dollars unless otherwise stated. A
copy of this report is available on the Company's website,
www.coalofafrica.com.
Salient Operational Features
-- No lost-time injuries ("LTIs") recorded during the quarter (FY2015 Q4: nil).
-- Continued engagements with the Department of Water and
Sanitation to progress the application for the Makhado Project
Integrated Water Use Licence ("IWUL"), expected to be granted in Q4
CY2015.
Corporate and Financial Features
-- The Company entered into a Subscription Agreement and a Loan
Agreement with Singapore registered private investment company
Yishun Brightrise Investment PTE Limited ("Yishun").
-- CoAL shareholder approval for the issue of 183,231,261
ordinary shares ("Subscription Shares") to Yishun for 5.15 British
pence per share.
-- Receipt of GBPGBP9.4 million (approximately US$14.7 million)
for the Subscription Shares and $10 million in terms of the Loan
Agreement with Yishun.
-- Commencement of Yishun's due diligence process for a
potential acquisition of a strategic interest in the Makhado hard
coking and thermal coal project ("Makhado Project").
-- Available cash at period end was $37.2 million and restricted cash of $1.3 million.
Commenting today, Mr David Brown, Chief Executive Officer said:
"The transaction with Yishun is an important milestone in the
identification of a strategic investor for the Company's flagship
Makhado Project. Yishun has commenced its due diligence on Makhado
and has expressed its intent to acquire an interest in the project,
provide the debt required to develop the colliery and, participate
in the engineering, procurement and construction contract, all on
commercial terms. The investment by Yishun is a vote of confidence
in the Makhado Project and ensures CoAL is in a position to
commence pre-construction activities once the water use licence has
been granted. CoAL has engaged constructively with the Department
of Water and Sanitation and anticipates that we will be granted a
licence in due course."
QUARTERLY COMMENTARY
Makhado Coking Coal Project - Soutpansberg Coalfield (100% owned
- 74% post BBBEE transaction)
The Makhado Project recorded no LTIs (FY2015 Q4: no LTIs) during
the quarter.
Makhado's 26-month construction phase is expected to begin in H2
CY2016 with a further four month ramp-up phase resulting in the
production of 5.5 million tonnes per annum ("Mtpa") of saleable
product. During the quarter, consultations continued with possible
project funders and potential customers to secure off-take
agreements for Makhado's hard coking and thermal coal products.
An interim court interdict seeking to halt any mining or
construction activity was issued against the Makhado Project during
Q2 FY2015. The Company, as one of the respondents, is preparing to
have the interim interdict set aside and the matter is due in Court
during November 2015. CoAL does not anticipate that the process
will affect Makhado's construction timetable.
Mooiplaats Colliery - Ermelo Coalfield (74% owned)
The Mooiplaats thermal coal colliery was placed on care and
maintenance during the September 2013 quarter and recorded no LTIs
during the period (FY2015 Q4: no LTIs).
During the quarter the Company continued discussions with other
potential purchasers and is assessing options regarding a
transaction at the colliery.
Vele Colliery - Limpopo (Tuli) Coalfield (100% owned)
The Vele coking and thermal coal colliery ("Vele Colliery")
recorded no LTIs during the quarter (FY2015 Q4: no LTIs).
The current Vele Colliery IWUL is valid until March 2016 and the
Company has delayed the commencement of the plant modification
construction pending the approval of the amended IWUL as well as an
assessment of forecast global coal prices. The Company previously
submitted applications to amend and renew Vele's IWUL and expects
these to be granted during H2 CY2015. CoAL does not anticipate any
delays as a result of the appeal lodged against the colliery's
amended and updated Environmental Authorisation.
Greater Soutpansberg Project (MbeuYashu) (74% owned)
The MbeuYashu Project recorded no LTIs (FY2015 Q4: no LTIs)
during the period.
Corporate
During the quarter the Company entered into a Subscription
Agreement and a Loan Agreement with Singapore registered Yishun, a
private investment company with interests in coal and nickel in
both China and Indonesia. In terms of the Subscription Agreement,
CoAL shareholders approved the issue the Subscription Shares to
Yishun, following which the Company received GBPGBP9.4 million
(approximately US$14.7 million). The subscription proceeds will be
used to finance pre-construction costs at the Makhado Project and
for general working capital.
Yishun has also expressed an intention to acquire a strategic
interest in the Makhado Project and has commenced with a due
diligence process. The potential transactions being discussed
include an equity investment in the Makhado Project, the provision
of a shareholder loan on commercial terms to provide the debt
required to develop the colliery and, the award of the Makhado
Project engineering, procurement and construction ("EPC") contract
also on commercial terms.
CoAL and Yishun also entered into a Loan Agreement in terms of
which Yishun has lent $10 million (approximately GBPGBP6.4 million)
to the Company. The loan will bear no interest and is only
repayable if:
-- an unrelated third party makes an equity investment in the
Makhado Project on or prior to 30 June 2016;
-- on or prior to 30 June 2016, CoAL or Baobab Mining &
Exploration (Pty) Ltd ("Baobab"), the Company's subsidiary that
owns the Makhado Project, decides not to proceed with the sale of
an equity interest in Baobab, to Yishun or its associates;
-- on or prior to 30 June 2016, Baobab or CoAL is put into
administration, liquidation or similar proceedings are
commenced;
-- on or prior to 30 June 2016, Baobab ceases to be the holder
of the New Order Mining Right for the Makhado Project or the
project is prohibited from being mined as a result of a permanent
regulatory prohibition; or
-- on or prior to 30 June 2016, CoAL or Baobab enters into an
agreement to sell to Yishun (or its designate, acceptable to CoAL)
an equity stake in Baobab and, CoAL or Baobab decides to not fulfil
the conditions precedent contained therein requiring:
o the entering into of the Makhado Project EPC contract on
commercial terms; and/or
o the entering into of an agreement in terms of which Yishun (or
its designate, acceptable to CoAL) provides a shareholder loan on
commercial terms providing the debt required for the development of
the Makhado Project.
Authorised by
David Brown
Chief Executive Officer
For more information contact:
Chief Executive +27 10 003
David Brown Officer Coal of Africa 8000
Chief Financial +27 10 003
De Wet Schutte Officer Coal of Africa 8000
+27 10 003
Celeste Riekert Investor Relations Coal of Africa 8000
Endeavour Corporate +61 08 9316
Tony Bevan Company Secretary Services 9100
Company advisors:
Jos Simson/Emily Financial PR +44 20
Fenton (United Kingdom) Tavistock 7920 3150
Matthew Armitt/Ross Peel Hunt +44 20
Allister Nominated Adviser LLP 7418 8900
Charmane Russell/Jane Financial PR Russell & +27 11
Kamau (South Africa) Associates 880 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 /MbeuYashu, including CoAL's Makhado Project
(coking and thermal coal).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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