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Sah - South African Coal Mining Holdings Limited - Major Company

Release Date: 26/06/2008 08:45:03      Code(s): SAH
SAH - South African Coal Mining Holdings Limited - Major company                
expansion - production and infrastructure - Announcement of rights offer        
South African Coal Mining Holdings Limited                                      
(Incorporated in the Republic of South Africa)                                  
Registration number 1994/009012/06                                              
Share code: SAH                                                                 
ISIN: ZAE000102034                                                              
("SACMH" or "the company")                                                      
Major company expansion - production and infrastructure                         
Announcement of rights offer                                                    
Highlights                                                                      
- Rights offer to raise R100m at R4.00 per share                               
 - Commitment from major shareholders holding a combined 65.3% interest         
    in SACMH to fully follow their rights in relation to the rights             
    offer                                                                       
- Infrastructure investment to improve cost effectiveness and                  
    facilitate expansion -Umlabu plant upgrade and New Voorslag siding          
    construction                                                                
 - Production to increase from 95ktpm to 150ktpm - two new underground          
sections                                                                    
 - Total cost of approximately R400m; balance of funding to be from             
    general issue of shares for cash of approximately R50m and from debt        
 - Expansion fully aligned with SACMH`s growth objectives                       
Karl Gribnitz, the CEO of SACMH said:                                           
"Having established SACMH as a profitable black owned and controlled coal       
mining company, we are now making a major investment in the business to         
increase production substantially and to become much more efficient. The        
Umlabu plant upgrade and new siding will cut out the need for any toll          
treatment and use of other sidings in the area, meaning significant cost        
savings.  We will be positioned to sell all our export quality coal             
through our increased RBCT allocation, which we expect to become                
available in the middle of next year."                                          
1 .Introduction                                                                 
Following an extensive review of its organic growth options, as discussed       
with investors during the recent annual results presentation and                
roadshow, SACMH has now decided to embark on a major investment in the          
infrastructure of the Umlabu mine. - This is in order to facilitate a           
substantial capacity upgrade and greater operational efficiencies. The          
group has already established a platform for sustainable coal operations        
and this expansion is fully aligned with SACMH`s growth objectives.             
The cost of the expansion is estimated at about R400 million and the            
board has decided to raise a portion of the capital required by way of a        
rights offer for R100 million through the issue of 25 million new shares        
("the rights shares") at a price of R4.00 per rights share in a ratio of        
16.47239 rights shares for every SACMH share held on the record date            
("the rights offer").  The remainder of the funding will be raised from         
debt and through further equity issues for about R50 million.  The equity       
issues will be in terms of the general authority to issue shares for cash       
granted to the directors of the company at the annual general meeting           
held on 30 April 2008.                                                          
Royal Bafokeng Holdings (Proprietary) Limited, Royal Bafokeng Capital           
(Proprietary) Limited and Strider Holdings (Proprietary) Limited, which         
together hold a combined interest in SACMH of 65.3%, have committed to          
follow their combined rights fully in respect of the rights offer. The          
rights offer has not been underwritten.                                         
2. Rationale for the rights offer                                               
In order to improve the profitability of its Umlabu mine, SACMH is              
planning to:                                                                    
 - improve the cost effectiveness of its business by substantially              
reducing both the level of toll treating and the use of other               
    sidings in the region; and                                                  
 - improve unit revenue by limiting the fraction of export quality coal         
    sold into the domestic market or into the export market through             
third party Richards Bay Coal Terminal ("RBCT") allocation.                 
The combination of the above requires a substantial investment by SACMH         
into its processing and logistics infrastructure.  The following capacity       
upgrades are to be undertaken (all figures are approximates):                   
- production upgrade: two new underground production sections to be            
    commissioned to increase run of mine ("ROM") production from 95 ktpm        
    to 150 ktpm;                                                                
 - plant upgrade: Umlabu processing plant capacity to be increased from         
35 ktpm to 110 ktpm in order to avoid toll treatments costs which           
    are R22/t higher than own plant costs;                                      
 - siding construction: Umlabu siding to be constructed with a capacity         
    of 60 ktpm in order to avoid transport to other sidings in the              
region which cost R96.50/t more than transport to the Umlabu siding;        
    and                                                                         
 - RBCT allocation upgrade: RBCT allocation to be increased from 17.25          
    ktpm to 58.85 ktpm.                                                         
The result of implementing these capacity upgrade programmes will be a          
mine capable of producing 150 ktpm ROM, of which 40 ktpm will be sold to        
Eskom, with the balance of 110 ktpm processed in-house through the              
upgraded plant facility for export. Following plant yield losses, it is         
estimated that about 60 ktpm will be exported, almost all of it through         
the increased RBCT allocation.                                                  
The R100 million to be raised in the rights offer will be directed at the       
earlier-dated capital items such as the plant upgrade, the siding civils        
and the initial stages of the flask loading system.                             
3. Summary of capacity upgrade programmes                                       
                                                                                
The table below summarises the above-mentioned capacity upgrade programme       
in terms of cost, and expected start and completion dates.                      
                                                                                
                                                                                
                                                                                
Estimated        Expected start   Expected                  
                    capital          date             completion                
                    expenditure (R                    date                      
                    `000)                                                       
Production upgrade                                                              
(2 sections)                                                                    
Continuous miner     43,000           July 2008        Aug 2008                 
                                                                                
Other                41,000           July 2008        Aug 2008                 
 Total              84,000                                                      
Plant upgrade                                                                   
Current plant           7,500         June 2008        July 2008                
upgrade                                                                        
                                                                                
 New plant             42,000        Nov 2008         Jan 2009                  
 Total                 49,500                                                   
Siding construction                                                             
Siding property         20,000        June 2008        July 2008                
Siding civils           42,000        June 2008        Sep 2008                 
Flask loading system    45,100        Aug 2008         Dec 2008                 
Electrification of      94,500        Aug 2008         July 2008                
railway                                                                         
Conveyor to siding      21,000        Oct 2008         Jan 2009                 
Total                   222,600                                                 
RBCT Phase V                                                                    
allocation                                                                      
Total                   43,000        Aug 2009         Aug 2009                 
Grand Total             399,100                                                 

4. Proposed dates relating to the rights offer                                  
The proposed dates relating to the rights offer are set out below:              
                                         2008                                   

Last day to trade in SACMH shares in                                            
order to participate in the rights offer                                        
(cum entitlement)                         Friday, 11 July                       
Listing of and trading in the letters of                                        
allocation on the JSE Limited ("JSE")                                           
commences at 09:00 on                     Monday, 14 July                       
SACMH shares commence trading ex-rights                                         
on the JSE at 09:00 on                    Monday, 14 July                       
Record date for the rights offer          Friday, 18 July                       
Rights offer opens at 09:00 on            Monday, 21 July                       
Last day for trading letters of                                                 
allocation on the JSE                     Friday, 1 August                      
Listing of rights shares and trading                                            
therein on the JSE commences on           Monday, 4 August                      
Payment to be made and form of                                                  
instruction lodged by holders of                                                
certificated shares with the transfer                                           
secretaries by 12:00 on                   Friday, 8 August                      
Rights offer closes at 12:00 (see note                                          
2) on                                     Friday, 8 August                      
Record date for the letters of                                                  
allocation                                Friday, 8 August                      
Rights shares issued and posted to                                              
holders of certificated shares on or                                            
about                                     Monday, 11 August                     
CSDP or broker accounts in respect of                                           
holders of dematerialised shares debited                                        
and updated with rights shares on         Monday, 11 August                     
Results of rights offer announced on                                            
SENS                                      Monday, 11 August                     
Results of rights offer published in the                                        
press                                     Tuesday, 12 August                    
Rights shares in respect of excess                                              
applications (if applicable) issued on                                          
or about                                  Tuesday, 12 August                    
Refund cheques posted to holders of                                             
certificated shares, if applicable, in                                          
respect of excess applications on or                                            
about                                     Tuesday, 12 August                    
Notes:                                                                          
 1.      Share certificates in respect of SACMH shares may not be               
      dematerialised or rematerialised between Monday, 14 July 2008             
      and Friday, 18 July 2008, both days inclusive.                            
2.      CSDPs effect payment on a delivery versus payment method in            
      respect of holders of dematerialised shares.  Holders of                  
      dematerialised shares are required to notify their CSDP or broker         
      of their acceptance of the rights offer in the manner and time            
stipulated in the custody agreement governing the relationship            
      between them and their CSDP or broker.                                    
 3.      Holders of dematerialised shares will have their accounts at           
      their CSDP or stockbroker credited with their rights entitlement          
on Monday, 21 July 2008.  Holders of certificated shares will have        
      their rights entitlements generated in electronic form and held at        
      Computershare Nominees (Pty) Limited on Monday, 21 July 2008.             
5. Conditions precedent                                                         
The rights offer is conditional upon:                                           
 - the granting by the JSE of a listing for the letters of allocation           
    and the rights shares; and                                                  
 - the registration by the Companies and Intellectual Property                  
Registration Office of all documents required in respect of the             
    rights offer.                                                               
Enquiries:                                                                      
SACMH                    011 748 2800                                           
Karl Gribnitz, CEO                                                              
Melanie Steyn, Executive Director                                               
College Hill             011 447 3030                                           
Nicholas Williams        082 600 2192                                           
Nandile Ngubentombi      082 825 8004                                           
Mirkwood                                                                        
26 June 2008                                                                    
Corporate adviser : QuestCo                                                     
Sponsor : QuestCo Sponsors                                                      
Date: 26/06/2008 08:45:01 Supplied by www.sharenet.co.za                     
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