COAL of Africa had extended the deadline for Blackspear Capital to prove it had the ability to access to funds to acquire its Mooiplaats Colliery in Mpumalanga by two more months, the company said yesterday. The deal was first announced on September 22.
The junior coal producer blamed the low commodity price environment for the extension of the completion of the sale purchase agreement on an non-exclusive basis for Blackspear to meet proof of funding condition precedent until June 30 from April 30.
The junior coal producer said it was also speaking with prospective buyers while it waited for Blackspear to meet the condition precedent for the R250 million acquisition.
Richard Morgan, an analyst with Mirabaud Securities, said Coal of Africa had nothing to lose in the extension of the sale as the agreement was non-exclusive and the company could talk to other groups while it waited for Blackspear to provide proof of funding.
“If Blackspear cannot find the money at the end of June, Coal of Africa can call the deal off or extend the deadline,” Morgan said.
Coal of Africa impaired Mooiplaats, which specialises in thermal coal, by $16.5m (R198.7m) in the six months to December 2013.
The company put the asset up for sale as part of a plan to revitalise the struggling junior coal producer. David Brown, the chief executive of Coal of Africa, said the company aimed to complete the sale as soon as possible.
“Despite this delay in the completion of the sale of Mooiplaats, much progress has been made and we remain committed to the completion of this transaction as soon as possible,” Brown said.
In the half year to December, Coal of Africa reported a loss of $0.8m, or 0.07c per share compared to a loss of $46.3m, or 4.42c per share for the prior corresponding period.
The company finalised an empowerment deal with seven local communities to acquire a 26 percent stake in its Makhado project, Limpopo, as part of the government’s requirement for a minimum of 26 percent black ownership in the mining sector.
The company previously signed an empowerment agreement with seven local communities to acquire a 20 percent interest in Makhado and has since identified suitable empowerment shareholders to acquire a further 6 percent interest in the project.
Both the transactions have been finalised.
Coal of Africa has also previously said in its financial report for the six months to December that it has been issued with an interim court interdict to halt construction or mining at the project and has begun to set aside the interdict together with other respondents.
The Coal of Africa shares on the JSE closed 4.55 percent lower at 46c.