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KEH - Keaton Energy Holdings Limited - Business update and changes to the

Release Date: 12/10/2011 13:07:24      Code(s): KEH
KEH - Keaton Energy Holdings Limited - Business update and changes to the       
board of directors                                                              
Keaton Energy Holdings Limited                                                  
(Incorporated in the Republic of South Africa)                                  
(Registration number 2006/011090/06)                                            
JSE code: KEH  ISIN code: ZAE000117420                                          
("Keaton Energy" or "the company")                                              
Business update and changes to the board of directors                           
Business update                                                                 
Interim results                                                                 
Keaton Energy`s six-month, interim reporting period ended on 30 September       
2011.  The company expects to release its interim financial results early       
in December 2011.                                                               
Project update:  Vanggatfontein Project                                         
During the period, 99 233 tonnes of 5-Seam coal were sold to the domestic       
metallurgical industry and thermal coal customers.  Demand was negatively       
affected during the winter months when customers traditionally shut down        
their furnaces for maintenance as electricity tariffs are at their              
highest.  The production of 5-Seam run-of-mine coal was also affected by        
geological washouts and weathered coal at the boundaries of the coal            
reserve.  The monthly sales target for 5-Seam coal remains 20 000 tonnes.       
Following the failure of a surge bin support structure in the 2- & 4-Seam       
plant on 27 May 2011, the ramp-up to full production of 2- & 4-Seam coal        
contracted to Eskom was affected.  An interim solution was found, using         
mobile conveyors to by-pass the damaged area, and 29 981 tonnes were            
delivered to Eskom in July 2011.  The damage was fully repaired by the          
end of July 2011, and 79 494 tonnes were delivered to Eskom in August           
2011 and 120 566 tonnes in September 2011.  The ramp-up is expected to          
continue until steady-state production of between 175 000 and 210 000           
tonnes per month is achieved.  Production in excess of 175 000 tonnes per       
month is required to reduce the backlog of under-delivered coal to Eskom.       
Legal advice has been sought relating to the liability for damage caused        
as a result of the support structure failure, and an announcement will be       
made once legal certainty has been achieved.                                    
The project is currently at its peak cash requirement, with the expected        
increase in production seeing the project break even in the next few            
months.  Rollover mining has been initiated in Pit 1, with Pit 2                
following in November 2011.  The contractor will also now move to 24/6          
operations to ensure that the required run-of-mine production can be            
Leeuw Mining and Exploration transaction ("the transaction")                    
While the conclusion of the transaction remains dependent on regulatory         
approval, operations at the Vaalkrantz Colliery have improved                   
dramatically following the support provided by Keaton Energy. Some 205          
715 tonnes of anthracite were produced in the period, with 91 374 tonnes        
exported and 114 341 tonnes sold to domestic customers.                         
Changes to the board of directors                                               
Resignation of the Financial Director and appointment of a Financial            
Director Designate                                                              
Johan Schonfeldt has given notice of his intention to resign his position       
as Financial Director of Keaton Energy with effect from 30 November 2011.       
He intends relocating to Australia with his family.  The Board would like       
to thank Johan for the invaluable contribution he has made to the               
establishment and on-going success of the company and wish him and his          
family all the best.                                                            
Jacques Rossouw has been appointed Financial Director Designate and will        
take up the position from 1 November 2011.  Jacques is a CA (SA), having        
completed his articles with PricewaterhouseCoopers, and subsequently            
worked in both the high technology and mining industries, most recently         
as Manager: Corporate Reporting at Harmony Gold Mining Company Limited.         
Change in executive director responsibilities                                   
Mandi Glad, currently Executive Director:  Marketing and New Business           
Development will assume responsibility for the company`s operations as          
Executive Director: Operations.  She will continue to have responsibility       
for coal marketing and regulatory matters. Paul Miller, Managing                
Director, will assume responsibility for New Business Development.              
12 October 2011                                                                 
Nedbank Capital                                                                 
Date: 12/10/2011 13:07:23 Supplied by www.sharenet.co.za                     
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