Banele Ginindza
SHARES in junior coal miner, Coal of Africa Limited (CoAL), plunged yesterday after it announced that the sale of Mooiplaats Colliery to little known Blackspear Capital had been brought to a halt after months of fruitless talks.
This caused CoAL’s shares on the JSE yesterday to lose 8.99 percent to close at 81c. The coal producer also has listings in Sydney and London.
The group said that the agreement with Blackspear, initially made in September last year, and extended until June 30 would not be extended any further.
Discussions
However, CoAL said it would continue discussions with various parties regarding the sale of the Mooiplaats asset, which the group had been looking to sell for R250 million.
The sale is key to CoAL’s survival as the company is presently living off emergency funding.
“The company is currently in project development and has no operating or producing mines. The company has strong institutional shareholder support which has provided the company with our required funding,” group finance manager Celeste Riekert told Business Report.
Despite the collapse of talks with Blackspear, CoAL though has kept Blackspear in the running by clarifying that it was one of the parties that the company was engaged with while at the same time CoAL continued to work towards sourcing the required funding.
“The sale and purchase agreement (SPA) was signed in September 2014 and therefore the agreement is somewhat outdated and would need to be revised anyway. Under the SPA, Blackspear did not have exclusivity so the agreement was not relevant anymore. A new SPA will be drawn up as soon as CoAL receives proof of funding from a potential funder,” Riekert said.
Riekert said that the delay in finding a committed buyer for the asset would not have negative implications for CoAL “other than it being the last outstanding item on the turnaround strategy and management are anxious to complete this sale in order for management to devote their full attention to the development of Makhado.” 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).
The collapse of the Blackspear deal places a heavy burden on management and is an anticlimax to CoAL’s shareholders who celebrated prematurely in September last year as its portfolio jumped on the news of the sale of the colliery.
Closure
The loss-making Mooiplaats operation, which had employed 548 people in total – 290 permanent employees and 258 contractors – was placed on care and maintenance in 2013.
The closure was necessitated by losses of more than R400m in 2012 and the previous financial year and was part of a strategy to turn around the struggling junior coal producer. The strategy included the identification and sale of non-core assets.
CoAL also retrenched employees at Mooiplaats. A disposal of the Woestalleen complex, the undeveloped Opgoedenhoop mining right in the Witbank coalfield, the Holfontien project and the Lemur investment were also part of the strategy.