Johannesburg - David Brown, the executive chairman of Coal of Africa Limited (CoAL), is upbeat about the future of the junior coal producer, saying the company has established a relationship with a local bank and had received a R200 million credit line as part of “de-risking” the company.
“We have received a credit facility of R200m and this clears the worries about the company’s liquidity.” He was speaking at the presentation of the year to June financial results.
He added that the company was on a new trajectory and was transforming into a project-developing firm with attractive assets, Vele and Makhado.
“CoAL has made significant progress in the execution of its focused turnaround strategy during the past four months which will reposition CoAL as a project-development company with a significant pipeline of hard coking coal near term and longer-term projects.”
As part of the turnaround, CoAL is selling four of five non-core assets. The sale of Woestalleen and other non-core assets Opgoedenhoop, Holfontein and Lemur was under way, he said. “We have raised funding and will be precluded from going to the market for cash.”
The firm had a difficult year and posted a headline loss a share of $0.11 (R1.13) from a loss of $0.23 last year.
CoAL’s coal sales decreased by 25 percent year on year to 2.54 million tons in the year to June after the depletion of the Vuna colliery resource at the end of March. The derailment on the Maputo rail corridor that resulted in the declaration of force majeure from February and May contributed to the loss. It posted a loss of $180.2m for the year from $160m last year. There were non-cash charges of $106.6m, including impairments of $48.5m at Mooiplaats.
CoAL is considering idling Mooiplaats if there are no viable alternatives in the short term. After completing the formal section 189 process it will place the asset on care and maintenance. The firm said Mooiplaats had not performed in line with managements’ expectations and continued to experience constrained production output and the mine remained unprofitable.
During the year CoAL completed a definitive feasibility study at Makhado, indicating a net present value of R6.8 billion
. In the year to June, it received a $100m investment from its strategic Chinese investor, Beijing Haohua Energy Resources. - Business Report