Dineo Faku
SHARES in Coal of Africa Limited (CoAL) jumped 18 percent in intraday trade yesterday following news of the sale of its Mooiplaats colliery.
Mooiplaats in Mpumalanga was sold to local privately owned coal operator Blackspear for R250 million.
The loss-making operation, which had employed 548 people in total – 290 permanent employees and 258 contractors – was placed on care and maintenance in October last year.
The closure was necessitated by losses of over 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 such as Mooiplaats because of financial challenges. CoAL also retrenched some employees.
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.
CoAL took impairments of R1.9 billion for the colliery up to the end of last year. It noted yesterday that coal prices had deteriorated since then.
It said the Mooiplaats sale would be settled in two tranches, with the first R150m expected in the first quarter of next year. The second tranche of R100m was payable “on the earlier of 12 months from the payment of the first tranche and November 30, 2015”.
The sale was subject to regulatory approvals, among other conditions, the company said.
“Following the signing of the sale and purchase agreement for Mooiplaats, CoAL will sell all of its non-core assets identified during the turnaround strategy,” chief executive David Brown said.
“On completion of these sales and the proposed equity financing we will be in a position to unlock the intrinsic value of our coking coal assets in South Africa and create value for all our stakeholders.”
The company said the last outstanding priority in its turnaround strategy was to secure the funding of and regulatory approvals for its Makhado coking coal project near Musina in Limpopo.
CoAL said it had applied for a new order mining right and integrated water use licence at Makhado and was working towards finalising the empowerment aspects required before the granting of the mining right.
“It has been an extremely challenging environment in which to execute our turn-around strategy,” Brown said.
In results for the quarter to June Brown said the proceeds from the Mooiplaats disposal would be used to reduce the R210m Investec working capital facility and to partially settle outstanding liabilities. It would complete the disposal process of the thermal coal portfolio.
The company had received stakeholder input for the application to amend the environmental authorisation in terms of the National Environmental Management Act relating to the Vele colliery plant modification project.
CoAL said extensive work had been done on the application to amend the colliery’s integrated water use licence to include the plant modifications in the quarter to June.
CoAL did not expect that the licence application would result in any delays to the construction of the plant.
CoAL shares surged by 12.5 percent to close at 63c on the JSE yesterday but were off the day’s best level of 66c.