Wrap Text
Report for the quarter ended 30 September 2013
Coal of Africa Limited
Incorporated and registered in Australia)
(Registration number ABN 008 905 388)
ISIN AU000000CZA6
JSE/ASX/AIM share code: CZA
("CoAL or the "Company" or the "Group")
ANNOUNCEMENT 31 October 2013
REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2013
Repositioning of CoAL on track
Coal of Africa Limited ("CoAL" or "the Company") which operates in South Africa, together with its
subsidiaries, hereby provides its operational report for the quarter ended 30 September 2013. 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 Features
- No lost time injuries recorded during the quarter (FY2013 Q4: three) with increased focus on safety
during repositioning processes and lower activity.
- Makhado Project received Environmental Authorisation from LEDET in terms of NEMA and
Environmental Impact Assessment Regulations.
- Run of mine coal production increased slightly to 202,910 tonnes from the previous quarter's 188,921
tonnes.
- Export coal sales from the Matola Terminal decreased from the previous quarter's 136,372 tonnes to
56,799 tonnes due to the exhaustion of export quality coal stockpiles.
Corporate and Financial Features
- Repayment of the remaining $12.5 million of the Deutsche Bank facility with only $1.1 million of the
Investec derivative facility outstanding at the end of the quarter.
- Completion of the regulatory Section 189 consultation processes resulting in the placement of the
Mooiplaats Colliery on care and maintenance and a reduction of corporate expenses.
- The Company's cost cutting processes have been completed and formal processes for the disposal of
non-core assets continued during the period.
- Settlement of litigation brought against CoAL by Coria (Pkf) Investments, Motjoli Resources Proprietary
Limited & Motjoli Resources Advisory Services cc and Ferret Mining & Environmental Services.
- Available cash of $9.6 million at end of the period.
Post period highlights
- R210 million (approximately US$21.4 million), 18 month credit facility secured from Investec Bank
Limited.
- Operations at the Vele Colliery wound down in anticipation of the plant modification in 2014.
Commenting today, Mr David Brown, Executive Chairman said: "The Company has made significant
progress in the execution of its enhanced turnaround strategy which will allow it to concentrate on the next
phase of the process. This entails the construction of the modified plant at Vele and the move to full
production.
The repayment of the Deutsche Bank facility during September 2013 and the conclusion of the Investec
loan in October 2013 ensures CoAL is well placed to complete its restructuring programme. Management is
confident that the overall strategy adopted will see the development of the Company's significant Limpopo
coking coal assets, for the benefit of all stakeholders. In addition the company has made excellent progress
in resolving various legacy legal issues".
QUARTERLY COMMENTARY
Operational Summary and Market Update
As a result of the Mooiplaats Colliery being placed on care and maintenance, sales of middlings coal to
Eskom, the state power utility, decreased from 202,581 tonnes in the June 2013 quarter to 141,798 tonnes
in the current period. Sales of export quality coal decreased from the previous quarter's 136,372 tonnes to
56,799 tonnes during the September 2013 quarter as a result of the run of mine ("ROM") stockpiles at
Woestalleen being exhausted during the previous quarter.
Pressure on index-linked RB1 export quality thermal coal prices continued, declining from $77 per tonne at
the end of June 2013 to $73 at the end of September 2013. Lower coal prices were partially offset by the
weakening of the South African rand with average exchange rates declining from ZAR9.47 in the June
2013 quarter to ZAR9.98 in the September 2013 quarter.
Woestalleen Complex Witbank Coalfield (100%)
The Woestalleen processing facility recorded no lost time injury during the quarter (FY2013 Q4: one LTI).
During the quarter CoAL progressed the sale of the Woestalleen processing complex and the undeveloped
Opgoedenhoop New Order Mining Right ("NOMR") and both transactions require Ministerial consent in
terms of Section 11 of the Mineral and Petroleum Resources Development Act ("MPRDA"). The Company
made good progress in satisfying the suspensive conditions for the disposals including lodging the consent
applications.
The Company continued to reprocess discard dumps at the Woestalleen site during the quarter, producing
99,257 tonnes for sale to Eskom (FY2013 Q4: 80,498 tonnes). In terms of an interim agreement with the
purchaser, Woestalleen processed 71,565 tonnes of third party ROM coal on a cost recovery plus margin
basis.
Mooiplaats Colliery Ermelo Coalfield (100%)
The Mooiplaats thermal coal colliery ("Mooiplaats Colliery") recorded no LTIs during the period (FY2013
Q4: two LTIs).
The colliery continued to produce Eskom middlings coal until the Section 189 restructuring process was
completed in early September 2013, resulting in agreement with stakeholders that the mine be placed on
care and maintenance. The shorter production period resulted in ROM coal production decreasing to
75,146 tonnes (FY2013 Q4: 179,603 tonnes). Coal processed decreased from 178,856 tonnes to 80,037
tonnes and the colliery produced a total of 61,057 tonnes of middlings coal for Eskom (FY2013 Q4:
134,020 tonnes).
The Company commenced with a formal disposal process in September 2013 aims to complete this
process prior to the end of the calendar year.
Vele Colliery Limpopo (Tuli) Coalfield (100%)
The Vele coking and thermal coal colliery ("Vele Colliery") recorded no LTIs during the quarter (FY2013 Q4:
nil LTIs).
The Vele Colliery produced 127,764 tonnes of ROM coal during the September 2013 quarter, an increase
from the previous quarter's 9,318 tonnes which was affected by the suspension of operations due to the
train derailment previously reported. The colliery processed 136,864 tonnes (FY2013 Q4: nil tonnes) of
ROM coal during the quarter, producing 32,399 tonnes (FY2013 Q4: 89 tonnes) of export quality thermal
coal.
Production of semi-soft coking coal for metallurgical coal trials was completed during the September 2013
quarter and over 300 tonnes were sent to ArcelorMittal South Africa Limited ("AMSA"). This coal will be
tested in AMSA's coke batteries and the results thereof are expected in the December 2013 quarter.
Optimisation studies for the Vele Colliery were completed during the quarter and in October 2013 the
Company announced that operations at the colliery will temporarily cease pending the modification of the
plant during CY2014.
Makhado Coking Coal Project Soutpansberg Coalfield (100%)
The Makhado coking coal project ("Makhado Project") recorded no LTIs (FY2013 Q4: no LTIs) during the
quarter.
During the quarter the Company received Environmental Authorisation in terms of the National
Environmental Management Act ("NEMA") and Environmental Impact Assessment Regulations from the
Limpopo Department of Economic Development, Environment and Tourism ("LEDET") for the Makhado
Project. This is a significant milestone towards achieving full regulatory compliance for the project and the
Company is working on finalising the Black Economic Empowerment ("BEE") aspects required in terms of
the South African legislation prior to the granting of a NOMR.
Greater Soutpansberg Project (MbeuYashu) (74%)
The MbeuYashu Project recorded no LTIs (FY2013 Q4: no LTIs) during the period.
During the period the Company commenced the Environmental Impact Assessment and Environmental
Management Programme processes for the Generaal and Chapudi projects and continued with the process
for the Mopane project. These processes are expected to be completed in early 2014.
Cash Position
Cash outflow from operations for the period reduced from $18.4 million in the June 2013 quarter to $8.1
million in the current quarter due to the reduction in activity at the Company's collieries. During the quarter
CoAL repaid the outstanding Deutsche Bank facility liability $12.4 million (FY2013 Q4: $11.5 million) and
$0.7 million (FY2013 Q4: $1.1 million) of the Investec derivative-backed finance facility.
Expenditure on exploration and evaluation in the December 2013 quarter is expected to be $2.7 million and
includes expenditure for public participation programmes for the MbeuYashu projects. Approximately $2.4
million will be spent on development and includes costs associated with Vele. Estimated production costs
for the three months of $41k relate to net expenses at the Mooiplaats and Woestalleen operations while
administration expenses of $2.5 million will be incurred to cover head office costs.
The estimated December 2013 quarter cash outflows included in the 5B report attached to this
commentary, should be seen in the context that revenue from the sale of coal or non-core projects has not
been taken into account neither has the ability to draw down on the announced Investec funding
Strategic and Corporate Update
Good progress is being made on all elements of the turnaround strategy and includes the closure of the
loss making Mooiplaats Colliery, advancement of the disposal of the Woestalleen complex and the
completion of studies on the potential expansion of the Vele Colliery. The Company also successfully
completed cost saving measures at its corporate head office and settled the following litigation matters:
- Withdrawal of the legal action instituted by Motjoli Resources Proprietary Limited & Motjoli Resources
Advisory Services cc suing the Company for 4,750,000 fully paid up ordinary shares in CoAL or, R95.5
million ($9.7 million) with interest.
- Settlement of the action instituted by Coria (Pkf) Investments 14 Proprietary Limited who claimed
damages of R4.3 million ($0.4 million) from wholly owned NuCoal Mining (Pty) Ltd. In terms of the
settlement, NuCoal will pay Coria R0.9 million ($0.1 million).
- Settlement of the litigation instituted by Ferret Mining & Environmental Services (Pty) Ltd in relation to
their historic shareholding in Mooiplaats Mining Limited, the intermediate holding company of the
Mooiplaats Colliery. In terms of the settlement, Ferret will be reinstated as 26% shareholders in
Mooiplaats Mining and will dispose of their interest should the colliery be sold. Ferret will receive a
maximum of R10.1 million ($1.1 million) should Mooiplaats be sold in the next 18 months or, a
maximum of R15.0 million ($1.6 million) if it is sold thereafter. The reinstatement of Ferret ensures that
the Mooiplaats Colliery complies with the BEE requirements stipulated in the MPRDA.
Authorised by
David Brown
Executive Chairman
31 October 2013
For more information contact:
David Brown Executive Chairman Coal of Africa +27 11 575 4363
Michael Meeser Chief Financial Officer Coal of Africa +27 11 575 4363
Celeste Harris Investor Relations Coal of Africa +27 11 575 4363
Tony Bevan Company Secretary Endeavour Corporate Services +61 8 9316 9100
Company advisors:
Jos Simson/Emily Fenton Financial PR (United Kingdom) Tavistock +44 20 7920 3150
Chris Sim/George Price/Jeremy Ellis Nominated Adviser Investec Bank plc +44 20 7597 5970
Charmane Russell/James Duncan Financial PR (South Africa) Russell & Associates +27 11 880 3924 or
+27 82 372 5816
Investec Bank Limited is the nominated JSE Sponsor
About CoAL:
CoAL is an AIM/ASX/JSE listed coal exploration, development and mining company operating in South Africa. CoAL's key projects include the Vele Colliery (coking
and thermal coal), the Greater Soutpansberg Project/MbeuYashu, including CoAL's Makhado Project (coking and thermal coal).
Appendix 5B
Mining exploration entity quarterly report
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.
Name of entity
Coal of Africa Limited
ABN Quarter ended ("current quarter")
98 008 905 388 30 September 2013
Consolidated statement of cash flows
Year to date
Cash flows related to operating activities Current quarter (12 months)
US$000 US$000
1.1 Receipts from product sales and related debtors
20,742 20,742
1.2 Payments for (a) exploration & evaluation (2,120) (2,120)
(b) development (4,981) (4,981)
(c) production (15,808) (15,808)
(d) logistics (1,424) (1,424)
(e) administration (4,783) (4,783)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature
received 403 403
1.5 Interest and other costs of finance paid (85) (85)
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (8,056) (8,056)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects - -
(b) equity investments - -
(c) other fixed assets - -
1.9 Proceeds from sale of: (a) prospects - -
(b) equity investments - -
(c) other fixed assets - -
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Other (provide details if material) 1,372 1,372
Net investing cash flows 1,372 1,372
1.13 Total operating and investing cash flows (carried
forward) (6,684) (6,684)
+ See chapter 19 for defined terms.
Appendix 5B
Mining exploration entity quarterly report
1.13 Total operating and investing cash flows (brought
(6,684) (6,684)
forward)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. - -
1.15 Proceeds from pending issues of shares* - -
1.16 Proceeds from sale of forfeited shares - -
1.17 Proceeds from borrowings - -
1.18 Repayment of borrowings (13,149) (13,149)
1.19 Dividends paid - -
1.20 Other (provide details if material) - -
Net financing cash flows (13,149) (13,149)
Net increase (decrease) in cash held (19,833) (19,833)
1.21 Cash at beginning of quarter/year to date 28,922 28,922
1.22 Exchange rate adjustments 471 471
1.23 Cash at end of quarter 9,560 9,560
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related
entities
Current quarter
US$'000
1.23 Aggregate amount of payments to the parties included in item 1.2 401
1.24 Aggregate amount of loans to the parties included in item 1.10 -
1.25 Explanation necessary for an understanding of the transactions
The balance in 1.23 includes all salaries and fees paid to directors.
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated
assets and liabilities but did not involve cash flows
2.2 Details of outlays made by other entities to establish or increase their share in projects in which
the reporting entity has an interest
+ See chapter 19 for defined terms.
Appendix 5B
Mining exploration en ntity quarterly report
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available Amount used
US$000 US$000
3.1 Loan facilities - 1,115
3.2 Credit standby arrangements - -
Estimated cash outflows for next quarter
US$000
4.1 Exploration and evaluation 2,677
4.2 Development 2,436
4.3 Production 41
4.4 Logistics -
4.5 Administration 2,471
Total 7,625
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as Current quarter Previous quarter
shown in the consolidated statement of cash flows) to US$000 US$000
the related items in the accounts is as follows.
5.1 Cash on hand and at bank 6,213 6,213
5.2 Deposits at call 3,347 3,347
5.3 Bank overdraft - -
5.4 Other (provide details) - -
Total: cash at end of quarter (item 1.22) 9,560 9,560
Appendix 5B
Mining exploration entity quarterly report
Changes in interests in mining tenements
Tenement Nature of Interest at Interest at
reference interest beginning of end of quarter
(note (2)) quarter
6.1 Interests in mining tenements
relinquished, reduced or lapsed
6.2 Interests in mining tenements
acquired or increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number quoted Issue price per Amount paid up
security (see per security (see
note 3) (cents) note 3) (cents)
7.1 Preference Nil
+securities
(description)
7.2 Changes during
quarter
7.3 +Ordinary 1,048,638,613 1,048,638,613
securities
7.4 Changes during
quarter
(a) Increases Nil Nil
through issues
(b) Decreases
through returns of
capital, buy-backs
7.5 +Convertible Nil
debt securities
(description)
7.6 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through securities
matured,
converted
7.7 Options 13,929,562 Nil Exercise price Expiry date
(description and See Note 6 See Note 6
conversion factor)
7.8 Issued during Nil Nil See Note 6 See Note 6
quarter
7.9 Exercised during Nil Nil See Note 6 See Note 6
quarter
7.10 Cancelled during Nil Nil
quarter
+ See chapter 19 for defined terms.
Appendix 5B
Mining exploration entity quarterly report
7.11 Debentures Nil
(totals only)
7.12 Unsecured notes Nil
(totals only)
Compliance statement
1 This statement has been prepared under accounting policies which comply with
accounting standards as defined in the Corporations Act or other standards
acceptable to ASX (see note 4).
2 This statement does give a true and fair view of the matters disclosed.
Sign here: ............................................................ Date: ...31 October 2013......................
(Company secretary)
TONY BEVAN
Print name: .........................................................
Notes
1 The quarterly report provides a basis for informing the market how the entitys
activities have been financed for the past quarter and the effect on its cash position.
An entity wanting to disclose additional information is encouraged to do so, in a note
or notes attached to this report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in
mining tenements acquired, exercised or lapsed during the reporting period. If the
entity is involved in a joint venture agreement and there are conditions precedent
which will change its percentage interest in a mining tenement, it should disclose the
change of percentage interest and conditions precedent in the list required for items
6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in
items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries
and AASB 1026: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International
Accounting Standards for foreign entities. If the standards used do not address a
topic, the Australian standard on that topic (if any) must be complied with.
6 Issued and Quoted Options as at 30 September 2013:
+ See chapter 19 for defined terms.
Appendix 5B
Mining exploration entity quarterly report
Number Issued Number Exercise Expiry Date Lapsed Since End
Quoted Price of quarter
818,500 - A$1.90 30 June 2014 -
3,000,000 - A$2.74 30 November 2014 -
2,500,000 - A$1.20 9 November 2015 -
1* - GBP0.60 1 November 2014 -
1,441,061 - A$1.40 30 September 2015 -
2,670,000 - ZAR7.60 14 February 2017 -
3,500,000 - GBP0.25 30 November 2015 -
*1 Option to subscribe for 50 million ordinary shares for 60 pence each between
1 November 2010 and 1 November 2014 as approved by shareholders on 22 April 2010.
== == == == ==
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