Wescoal Holdings Limited - Chairmans Operational And Company Update At The Agm Held On 13 November 2015Release Date: 13/11/2015 11:20:00 Code(s): WSL
WESCOAL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 2005/006913/06)
Share code: WSL
(?Wescoal? or "the Company")
Chairman?s Operational and Company Update at the AGM held on 13 November 2015
The Company remains focused on the long-term priorities of strategy, growth (both through acquisition as well as
organic growth), sustainability and governance.
- Board composition: given that our company is changing at a rapid pace and the results of our independent
Board evaluation process, the Board agreed that it needs to be strengthened and to be more inclusive. It needs
to include more independent directors, mining specialists and increased black female representation. We are
now reviewing the Wescoal MOI to align it with the requirements of the company. We will soon convene an
extraordinary shareholders meeting to consider the proposed amendments to the MOI.
- BEE shareholding: Our BEE and M&A strategies are inter-related and will enable WSL to meet its goal of 50%+1
ownership by December 2016.
o We continue to engage with potential and strategic BEE investors and coal mining operations.
Additionally, we continue to look for resources adjacent to or in close proximity to our operations to
increase life of mine in Witbank basin as well as potentially new mining opportunities. While there is a
clear target for BEE ownership, we also place a high priority on BEE employment and procurement
- Leadership succession: The early retirement of Wescoal?s former CEO in March, required the positioning of
Waheed Sulaiman as CEO in an acting capacity. The appointment of a permanent CEO will be announced
sometime soon. More recently, the resignation of Morne du Plessis as CFO, determined that Izak van der Walt
be positioned as CFO in an acting capacity.
- Stakeholder communications: Wescoal strives to establish and enhance a platform of clear, communication,
based on mutual respect with shareholders and stakeholders. To this end, Wescoal has retained external
advisors, opened some new channels of communication and strengthened its information management systems.
- Governance: The appointment in September of Vikesh Dhanooklal (who you see here today), as Group Legal
Advisor, brings more than the required skills and capacity in service of the Board and the Company.
- Corporate cultural: Alignment and integration of the Mining and Trading divisions is progressing well and has
contributed to cost savings and productivity improvements.
Market conditions: We believe, that both international and domestic coal markets will continue to experience
severe market pressures for the foreseeable future. However, we also believe that we are increasingly well
positioned to take advantage of some local opportunities that these conditions will inevitably create. In the long-
term, we continue to build our strategy around Eskom as 80% of our reserves meet Eskom requirements.
Overall, Wescoal?s growth strategy is underpinned by revenues from its Elandspruit operation and cash flow
generation capacity from its trading business.
As announced, the rights issue and claw-back is proceeding towards a conclusion in early December 2015 and aims
to raise up to R64 million. The proceeds will mainly go towards optimisation projects, mitigation of operational risks
at Elandspruit, rebalancing internal cash flows and will further enable the company to take advantage of other
It will also relieve the dependency on bank funding which is in turn constrained due to a lag in securing long-term
Eskom contracts. I can report that discussions with Eskom for long-term contracts are at an advanced stage with the
power producer due to take up the majority of all the coal we can produce. It also protects Wescoal to some extent
from the vagaries of the international market.
Operational Update: The mining division is on track to produce approximately three hundred and thirty five
thousand tons of Run of Mine per month, during the final quarter of the current financial year. This is equivalent to
approximately four million tons of Run of Mine on an annualised basis.
Elandspruit produced first coal in July 2015. Currently all of the coal from Elandspruit is being sold to Eskom.
The trading division had a strong first half as reported in October and we expect this division to continue to
contribute strongly to Wescoal?s performance.
We remain committed to the transformation, development and growth of Wescoal and South Africa by extracting
and marketing resources in a sustainable and responsible manner.
13 November 2015
Date: 13/11/2015 11:20:00 Supplied by www.sharenet.co.za
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