TIDMCZA
RNS Number : 3060Z
Coal of Africa Limited
14 March 2017
ANNOUNCEMENT 14 March 2017
RESULTS FOR THE 6 MONTHSING DECEMBER 2016
Coal of Africa Limited ("CoAL" or the "Company") is pleased to
provide its Interim Financial Statements for the six months ending
31 December 2016. The full report is available on the Company's
website: www.coalofafrica.com.
Highlights:
-- No fatalities (FY2015: none) and no lost time injuries
recorded during the year (FY2015: none);
-- Decrease in loss for the period to US$12.97 million (2015: US$14.3 million);
-- Consistent progress in the regulatory requirement for the projects; and,
-- Company continues to explore opportunities with regard to the
acquisition of a cash generating asset.
Review of Operations
Vele Colliery - Limpopo (Tuli) Coalfield (100% owned)
The Vele coking and thermal coal colliery ("Vele Colliery")
recorded no LTIs during the period.
The original Vele Colliery Integrated Water Usage Licence
("IWUL") was renewed in January 2016 for a further 20 years, and
also amended in line with the requirements for the Plant
Modification Project (PMP) at the Colliery.
In January 2017, the South African Department of Mineral
Resources ("DMR") granted an Environmental Authorisation in terms
of the National Environmental Management Act ("NEMA") (Act 107 of
1998) and the Environmental Impact Assessment Regulations (2014)
for Vele Colliery for stream diversion and associated
infrastructural activities.
CoAL awaits the approval of an IWUL from the Department of Water
and Sanitation ("DWS") which is the final regulatory approval
required for the stream diversion in respect of the future mine
work plan.
Makhado Coking Coal Project (74% owned)
As required under South African mining legislation, a minimum
26% black economic empowerment ("BEE") shareholding is required for
mining and exploration projects. CoAL previously signed a
Memorandum of Agreement to enable a Broad Based Black Economic
Empowerment consortium comprising seven local communities to
acquire a 20% interest in the Makhado Project and the Company has
identified suitable BEE shareholders to acquire a further 6%
interest in the project. These transactions were formalised in the
prior year and will ensure that the Makhado Project has the
requisite ownership structure.
The NOMR for the Makhado Project was granted in May 2015 as well
as a section 11 approval for the transfer of the right to CoAL's
subsidiary, Baobab Mining. The Company was granted the IWUL in
January 2016 for the period equal to life of mine. The Company
completed a Definitive Feasibility Study ("DFS") for Makhado during
FY2013 which indicates that the project has 344.8 million mineable
tonnes in situ and a 16 year life of mine. The opencast project is
expected to produce 12.6Mtpa of ROM coal yielding 2.3Mtpa of hard
coking coal and 3.2Mtpa of thermal coal for domestic and export
markets. The Makhado project finalised the FEED during the prior
financial year.
An interim court interdict seeking to halt any mining or
construction activity was issued against CoAL during the second
quarter of the 2014 financial year. The condition compelling CoAL
to conduct a Strategic Regional Impact Assessment has been set
aside. The interim interdict against the Environmental
Authorisation remains in place pending the review of the
authorisation.
The Company was granted an IWUL for a period of 20 years but was
automatically suspended following an appeal to the DWS submitted by
the Vhembe Mineral Resources forum and other parties.
Once regulatory approvals and funding is in place, the company
will seek to commence construction in calendar year 2018, subject
to board approval.
Greater Soutpansberg Project (MbeuYashu) (74% owned)
The MbeuYashu Project recorded no LTIs during the period.
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 (FY2016 H1: nil).
During the period the Company continued discussions with
potential purchasers and is assessing options regarding a
transaction at the colliery.
Corporate
The Company is in the process of evaluating a number of
opportunities to acquire a cash generating asset which meet CoAL's
acquisition criteria. We continue to engage with potential funders
to ensure any potential opportunity can be appropriately financed.
Any purchase of this nature does not confer any certainty of
funding for the enlarged group and the Company will keep the market
informed in a timely manner. The Company is also aware of the
current cash balances and the requirement to fund the last legacy
liability in June 2017 and is also in discussions to ensure the
payment of this liability can be funded and provide sufficient
funding to move forward on the Makhado Project.
Baobab Mining and Exploration (Proprietary) Limited
("Baobab")
The Company entered into a non-binding Memorandum of
Understanding ("MOU"), in the prior period, with Qingdao Hengshun
Zhongsheng Group Co Ltd ("Hengshun") with respect to a proposed
equity investment in Baobab, a subsidiary of CoAL. Baobab is the
legal owner of the mining right for the Makhado Project. Hengshun
is an industrial conglomerate incorporated in Qingdao, Shandong
Province, China and listed on the Shenzen Stock Exchange.
As the Company has been focusing on the acquisition of a cash
generating asset and the repayment of the final legacy issues,
there has been no progression of the MOU.
Yishun Brightrise Investment PTE Limited ("Yishun")
In September 2015, the Company and Yishun entered into a Loan
Agreement in terms of which Yishun has agreed to lend the Company
$10 million. The loan bears no interest and is repayable in certain
circumstances.
During May 2016, the Company and Yishun amended the terms of the
Loan to specify the conditions that would trigger the repayment of
the Loan. The long stop date for the conditions was agreed as 31
December 2016 and if none of these trigger events occurred prior to
the long stop date then the Loan would become convertible to
equity. None of the trigger events have occurred and the Company
will now convert the Loan to equity at the agreed price of $0.04081
per share.
The total amount of Conversion Shares will amount to 245,037,980
and the conversion into equity will occur in two tranches. The
first tranche of 240,042,603 shares has taken place under the
general placement authority according to the ASX Listing rule 7.1
and the second tranche of 4,995,378 shares will be converted into
equity once the general placement authority has been replenished by
shareholders at the Annual General Meeting ("AGM"). Post the issue
of both tranches of the Conversion Shares Yishun will have a
shareholding of 428,269,241 ordinary shares equating to a 19.28%
shareholding of the Company. Yishun will have the right to nominate
an independent director to the Board of CoAL.
Financial review
The loss for the six months under review was $12.97 million or
0.68 cents cents per share compared to a loss of $14.3 million, or
0.77 cents per share for the prior corresponding period.
The loss for the period under review of $12.97 million (H1 2015:
$14.3 million) includes:
-- net foreign exchange gain of $2.9 million (2015: loss of $9.4
million) arising from the translation of inter-group loan balances,
borrowings and cash due to changes in the ZAR:USD and AUD:USD
exchange rates during the period;
-- employee benefit expense of $2.5 million (2015 expense: $2.0 million)
-- other expenses of $2.3 million (2015: $3.2 million)
-- an impairment of $10.6 million was recognized on the
intangible asset due to the Company deciding not to renew its
agreement with Terminal de Carvao da Matola ("TCM") which granted
the Company port capacity through the Matola terminal until
2028.
-- depreciation of $0.2 million (2015: $0.2 million) and
amortisation of NIL (2015: $0.4 million).
As at 31 December 2016, the Company had cash and cash
equivalents of $7.0 million compared to cash and cash equivalents
of $19.5 million at 30 June 2016.
Authorised and issued share capital
CoAL had 1,927,001,328 fully paid ordinary shares in issue as at
31 December 2016. The holders of ordinary shares are entitled to
one vote per share and are entitled to receive dividends when
declared.
Dividends
No dividends were declared or paid during the six months.
Highlights and events after the reporting period
M&G INVESTMENT MANAGEMENT LIMITED share placement
On 8 February 2017, 49,007,596 CoAL shares were issued to the
company's shareholder M&G Investment Management Limited at a
price of $4.081 cents per share in terms of the subscription
agreement entered into between the Company and M&G to raise $2
million for working capital purposes.
Further investment
The Company entered into a conditional agreement with an
external party to raise $10 million via the issuance of new equity,
which will be subject to shareholder approval. A circular including
further details of this investment will be sent to shareholders
when the Company is in a position to disclose additional detail.
The use of these funds is restricted until 31 March 2017. However
if certain conditions precedent are not met by this date the funds
can be used at the Company's discretion subsequent to receipt of
shareholder approval, and become unrestricted. The Company will
update the market on or around 31 March 2017.
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 van Tonder 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 Nominated Adviser Peel Hunt +44 20
Allister and Broker LLP 7418 8900
Charmane Russell/Olwen Financial PR Russell & +27 11
Auret (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
IR SFMFLDFWSEID
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