CoAL - report for the quarter
CoAL, together with its subsidiaries, hereby provides its update for the quarter ended 31 December 2015. All figures are denominated in United States dollars unless otherwise stated. A copy of this report is available on the Company's website, www.coalofafrica.com.
Salient Operational Features
- No lost-time injuries (˘LTIs÷) recorded during the quarter (FY2016 Q1: nil).
- The Integrated Water Use Licence (˘IWUL÷) for its Vele Colliery in the Limpopo Province has been renewed for a further twenty years.
- IWUL for its Makhado Project has been granted by the Department of Water and Sanitation (˘DWS÷) for a period of 20 years.
- The South African Minister of the Department of Environmental Affairs (˘DEA÷), has dismissed the Appeal against the Environmental Authorisation (˘EA÷) Amendment for the Vele Colliery in the Limpopo Province.
- The Company awarded the Optimisation Study and Front End Engineering and Design (˘FEED÷) package for Makhado Colliery to DRA Project South Africa (˘DRA÷).
- The Company signed a non-binding Memorandum of Understanding (˘MOU÷) with Qingdao Hengshun Zhongsheng Group Co Ltd (˘Hengshun÷) with respect to a proposed equity investment in Baobab Mining and Exploration (Pty) (˘Baobab÷) a subsidiary of CoAL. Baobab is the subsidiary of CoAL that owns the Mining right for the Makhado Project.
Corporate and Financial Features
- The Company agreed the terms of a recommended Offer to be made by CoAL for the entire issued and to be issued share capital of Universal Coal Plc (˘Universal÷).
- Available cash at period end was USD31.1million and restricted cash of USD1.018 million.
Makhado Coking Coal Project ű Soutpansberg Coalfield (100% owned - 74% post BBBEE transaction)
The Makhado Project recorded no LTIs (FY2016 Q1: nil) during the quarter.
MakhadoĂs 26-month construction phase is expected to begin during H2 CY2016, with a further four month ramp-up phase resulting in the production of 5.5 million tonnes per annum (˘Mtpa÷) of saleable product. During the quarter the Optimisation study and FEED was awarded to the International engineer and project delivery group DRA. The study follows on the original works performed by DRA during the Definitive Feasibility Study completed in 2013 and includes the infrastructure components of the project, and also the integration of the work of a number of specialist consultants.
The Company has officially been granted an IWUL for a period of 20 years concluding all regulatory approvals for the Makhado Project. The award of the IWUL for Makhado further signifies governmentĂs commitment to the flagship project, and its potential to foster socio economic transformation. An interim court interdict seeking to halt any mining or construction activity was issued against the Makhado Project during Q2 FY2014. The matter was heard in the North Gauteng High Court on 3 December 2015 with judgement handed down on Tuesday 8 December 2015 on two matters. The first relates to the condition to compel CoAL to conduct a Strategic Regional Impact Assessment and secondly a review of the Environmental Authorisation. The condition compelling CoAL to conduct a Strategic Regional Impact Assessment has been set aside. The interim interdict against the Environmental Authorisation remains in place pending the review of the authorisation. CoAL does not anticipate that the process will affect MakhadoĂs construction timetable.
Mooiplaats Colliery ű Ermelo Coalfield (74% owned)
The Mooiplaats thermal coal colliery was placed on care and maintenance during the September 2013 quarter and recorded no LTIs during the period (FY2016 Q1: nil). During the quarter the Company continued discussions with other potential purchasers and is assessing options regarding a transaction at the colliery.
Vele Colliery ű Limpopo (Tuli) Coalfield (100% owned)
The Vele coking and thermal coal colliery (˘Vele Colliery÷) recorded no LTIs during the quarter (FY2016 Q1: nil). The original Vele Colliery IWUL, valid until March 2016, has been renewed for a further 20 years, and also amended in line with the requirements for the Plant Modification Project (PMP) at the Colliery. During H2 2015, the Company commenced a process to obtain approval relating to a non-perennial stream diversion. This decision is anticipated in H2 2016. Once this regulatory approval in respect of the Colliery has been received, the final decision to proceed with the PMP will be placed before the board, which will include an assessment of forecast global coal prices.
Greater Soutpansberg Project (MbeuYashu) (74% owned)
The MbeuYashu Project recorded no LTIs (FY2016 Q1: nil) during the period. No other significant matters to report.
During the quarter the Company entered into a MOU with Hengshun with respect to a proposed equity investment in Baobab a subsidiary of CoAL. Baobab is the legal owner of the mining right for the Makhado Project. Hengshun is an industrial conglomerate incorporated in Qingdao, Shandong Province, China and listed on the Shenzen Stock Exchange.