CoAL said yesterday that it had sold the mine to Mooiplaats Coal Holdings (MCH) after struggling to do so since a formal sale process begun in 2013.
CoAL, which is also listed in Australia and the UK, closed 8.7% higher at 50cents a share on the JSE yesterday, following the announcement.
David Brown, CoAL chief executive, said yesterday that the sale was the final step in the company’s balance sheet restructuring strategy, setting the course for CoAL to become self-sufficient.
“The disposal will yield annual operational cost savings of approximately $1.4 million (about R19m) and the aggregate proceeds of approximately R179.9m will be used to settle Ferret, our Mooiplaats Black Economic Empowerment partner, funding for further development of the flagship Makhado Project or the potential acquisition of a cash-generating asset. The sale also frees up valuable in-house human resources, facilitating additional focus on Makhado, ensuring the asset can be brought to production optimally.”
MCH members comprised young black professionals, future Mooiplaats Colliery employees when it reopens, communities, To The Point Growth Specialists and experienced coal mining executives, including Don Turvey.
The consortium was funded by the newly established Last Mile Fund created by Africa Rainbow Capital, the investment company founded by Motespe, who chairs African Rainbow Minerals.
Motsepe joins Swanepoel, Nkosi and Clinton Halsey in the Last Mile Fund. MCH’s structure was compliant with the proposed requirements of the currently suspended third version of the mining charter, the company said.
The company had hoped to sell Mooiplaats for R250m as a key to its survival. It had embarked on a formal sale process for the Mooiplaats Colliery during 2013, but hit stumbling blocks, including the collapse of talks to sell it to little-known Blackspear Capital.
Mooiplats has been idle since October 2013, owing to the low global thermal coal prices from 2013 and rapidly increasing logistics costs. It was placed on care and maintenance after losses of more than R400m in 2012 and the previous financial year.
The payment will be made in instalments starting with a purchase price of R67m.
CoAL on Friday announced the downscaled plant for its Makhado project in Limpopo. It said that the Makhado Lite project would be constructed in 12 months, at a cost of between $75m to $85m.