JOHANNESBURG - The JSE listed coal development and operating company Coal of Africa (CoAL) announced its downscaled plan for its Makhado Project in the Soutpansberg area in Limpopo.
The original Makhado Project development plan included a 26-month construction phase followed by a four-month ramp-up to achieve a production rate of 5.5million tons per annum (mtpa) with a capital requirement of $281million (R3.8billion).
The company has reviewed Makhado’s development plan and re-assessed its strategy, resulting in an amended plan requiring reduced capital expenditure, a shorter construction period and earlier than planned production. “This revised strategy anticipates that the Makhado Lite Project will be constructed in 12months, costing an estimated $75 to $85m and allows for the future expansion of mining and production.
"The Makhado Lite Project will produce approximately 1.7mtpa of saleable coal, comprising 0.7mtpa to 0.8mtpa of hard coking coal and 0.9mtpa to 1mtpa of export quality thermal coal." The company anticipates that a substantial portion of the hard coking coal produced will be sold locally with the balance sold on international markets.
Chief executive David Brown said CoAL continued to ensure that it was well positioned to unlock near-term shareholder value from the flagship Makhado Project. “As part of this, the company recognised the limited cash flow that would have been generated during Makhado’s pre-production phase and as a result, the CoAL board approved the Makhado Lite Project in September 2017, ensuring similar returns to the original design with lower capital requirements and a shorter construction phase,” Brown said.
CoAL is a listed coal exploration, development and mining company operating in South Africa. CoAL’s key projects include the Uitkomst Colliery, Makhado Project (coking and thermal coal), Vele Colliery (coking and thermal coal) and the Greater Soutpansberg Project (MbeuYashu).
In the results for the year to end June, the company incurred a net loss after tax of $17.4m, improving on last year’s loss of $22.5m, including an impairment of $10.6m, a foreign exchange gain of $3.4m and depreciation and amortisation charges of $0.4m. Net cash outflows from operating activities were $9.8m, down from $12.7m and net cash outflow from investing activities were $6.2m, up from last year’s $3.8m.
During the period the company had a net current asset position of $11.6m and net current liability position of $9.6m, excluding assets and liabilities classified as held for sale. The company raised additional capital of $15m from M&G Investment Management and Summer Trees.
CoAL also received a debt facility for up to R240m secured from the Industrial Development Corporation of South Africa for the development of the Makhado Coking and Thermal Coal Project.
- BUSINESS REPORT