Wescoal sells Vlaklaagte rights

inlsa

Wescoal Mining (WSL) has acquired the Vlaklaagte prospecting right and any subsequent mining rights from its subsidiary‚ Wescoal Exploration‚ and has agreed to sell the mining rights to Xstrata for R81m.

In addition‚ Xstrata has agreed to sell its Elandspruit mining right to Wescoal Mining.

Wescoal subsidiary Blanford has entered an agreement with Xstrata to buy three properties making up the bulk of the surface rights on which the Elandspruit mining operations will be conducted - known as the Duiker Properties acquisition.

The Vlaklaagte prospecting area is in Mpumalanga‚ 15km from Witbank and contiguous to the Xstrata Tweefontein colliery. It covers an undeveloped export quality thermal coal deposit with a measured resource of about 25.5 million tons.

Wescoal Mining holds 60% of the issued shares of Wescoal Exploration‚ and Proudafrique 147 holds 40%. Wescoal Mining agreed to acquire Vlaklaagte for R60m.

Wescoal Exploration will declare a dividend from the proceeds of the sale. Proudafrique will use some of the funds received to acquire 14.286 million Wescoal ordinary shares at an agreed issue price of 70 cents per share.

Wescoal Mining has undertaken to pay Proudafrique a royalty fee of R5 per ton of saleable coal mined at Elandspruit or any other resource acquired using the proceeds of the sale of the Vlaklaagte mining right.

Should Wescoal Mining not use the proceeds of the Vlaklaagte sale to acquire any other right within two years of the effective date of the Vlaklaagte disposal‚ it will pay Proudafrique R13.5m in full and final settlement of its right to claim the royalty.

The transaction is subject to several conditions‚ including approval by the competition authorities and ministerial consent.

The sale of the Vlaklaagte mining right is in line with Wescoal’s stated goal of securing and retaining only high-quality coal resources that can be mined by the opencast method to increase production and sustainability.

The resource covered by the Vlaklaagte right is an underground resource that would require extensive capital expenditure to bring to full production which‚ in Wescoal’s instance‚ would be prohibitive. As Vlaklaagte is contiguous to the Xstrata Tweefontein Complex‚ the most sensible economic model is for Xstrata to exploit the resource directly from its contiguous operations requiring minimal capital investment and infrastructure spend‚ it said.

Wescoal Mining has agreed to sell the Vlaklaagte mining right to Xstrata for R81.12m.

The Elandspruit mining right‚ in the Middelburg district of Mpumalanga‚ covers an undeveloped export quality thermal coal deposit with a measured resource of about 30.5 million. Situated 9km from Middelburg‚ it is contiguous to the Shanduka Graspan colliery.

The Elandspruit mining right is the right granted to Xstrata subsidiary Duiker Mining to mine for coal.

The farm Elandspruit 291JS has an existing mining right with a resource of 30.5 million tons and when mining begins will be a further step towards Wescoal’s objective for its various operations to produce 4 million tons of coal a year.

The sustainability of Wescoal’s mining operations will increase by 12 to 15 years and Wescoal will strive to start mining by late 2013 or early 2014.

Wescoal Mining agreed to purchase the Elandspruit Mining Right from Xstrata for R93.8m.

The three properties to be acquired from Xstrata are situated in Middelburg.

The Duiker Properties are still registered in the name of Duiker‚ but are in the process of being transferred to Xstrata.

The Duiker properties make up the bulk of the surface rights required to conduct mining operations on the Elandspruit resource.

Wescoal Mining intends acquiring all properties affected by Wescoal mining activity so as not to have third-party influence on operations.

Wescoal Mining agreed to purchase the Duiker Properties from Xstrata for R3.4m.

Wescoal also said it had ended talks on the proposed acquisition of the Pegasus Project. It had planned to buy 51% of the share capital of EZIM from HSTI 17 Proprietary Limited (HSTI) in respect of the Pegasus Project.

The Pegasus Project is an undeveloped‚ export-quality thermal coal deposit with a measured resource of about 15 million tons near Witbank.

Wescoal said it had ended talks on Pegasus after it became apparent too many uncertainties remained. - I-Net Bridge