Wrap Text
Interim results for 31 December 2012
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")
FINANCIAL REPORT
FOR THE HALF YEAR ENDED
31 DECEMBER 2012
CORPORATE DIRECTORY
REGISTERED OFFICE Suite 8, 7 The Esplanade
Mt Pleasant, Perth, WA 6153
Telephone: +61 8 9316 9100
Facsimile: +61 8 9316 5475
Email: perth@coalofafrica.com
SOUTH AFRICAN OFFICE 2nd Floor, Gabba Building
Dimension Data Campus
57 Sloane Street
Bryanston
Telephone: +27 11 575 4363
Facsimile: +27 11 576 4363
BOARD OF DIRECTORS Non executive
David Brown (Chairman) (appointed 6 August 2012)
Bernard Pryor (appointed 6 August 2012)
Peter Cordin
David Murray
Khomotso Mosehla
Rudolph Torlage
Richard Linnell (resigned 6 August 2012)
Steve Bywater (resigned 6 August 2012)
Mikki Xayiya (resigned 6 August 2012)
Executive
John Wallington (Chief Executive Officer)
Professor Alfred Nevhutanda
Simon Farrell (resigned 6 August 2012)
Wayne Koonin (resigned 29 November 2012)
COMPANY SECRETARY Tony Bevan (appointed 12 December 2012)
Shannon Coates (resigned 12 December 2012)
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
AUDITORS Deloitte Touche Tohmatsu Deloitte & Touche
240 St Georges Terrace Deloitte Place
Perth WA 6000 Building 1
Australia The Woodlands
20 Woodlands Drive
Woodmead 2052
South Africa
BANKERS NAB Limited Investec Bank plc ABSA Bank
Level 1, 1238 Hay Street 2 Gresham Street The Podium
West Perth WA 6005 London EC2V 7QP Norton Rose Building
Australia United Kingdom 15 Alice Lane
Sandton South Africa
AUSTRALIA UNITED KINGDOM SOUTH AFRICA
BROKERS Euroz Securities Limited Investec Bank plc N/A
Level 18, Alluvion 2 Gresham Street
58 Mounts Bay Road London EC2V 7QP
Perth WA 6000 United Kingdom
Australia
Mirabaud
21 St James' Street
London SW1Y 4JP
United Kingdom
LAWYERS Corrs Chambers Westgrath Hogan Lovells International Webber Wentzel
Governor Phillip Tower LLP 10 Fricker Road
1 Farrer Place Atlantic House Illovo Boulevard
Sydney, New South Wales Holborn Viaduct Johannesburg 2196
2000 London EC1A 2FG South Africa
Australia United Kingdom
NOMAD/ N/A Investec Bank plc Investec Bank Limited
CORPORATE 2 Gresham Street 100 Grayston Drive
SPONSOR London EC2V 7QP Sandown 2196
United Kingdom Johannesburg
South Africa
Index
The reports and statements set out below comprise the half year report presented to shareholders:
Contents Page
Directors' Report 4
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 11
Condensed Consolidated Statement of Financial Position 12
Condensed Consolidated Statement of Changes in Equity 13
Condensed Consolidated Statement of Cash Flows 14
Notes to the Condensed Consolidated Half year Report 15
Directors' Declaration 30
Auditor's Independence Declaration 31
Independent Auditor's Review Report 32
DIRECTORS' REPORT FOR THE HALF-YEAR ENDED 31 DECEMBER 2012
The Directors present their report on the consolidated entity comprising Coal of Africa Limited ("CoAL" or "the
Company" or "the Group") and the entities it controlled for the six months ended 31 December 2012 together
with the auditor's review report thereon:
Directors
The Directors of the Company in office during the six months and to the date of this report are:
David Brown* (Chairman)(appointed 6 August 2012)
Bernard Pryor* (appointed 6 August 2012)
Peter Cordin*
David Murray*
Khomotso Mosehla*
Rudolph Torlage*
John Wallington (Chief Executive Officer)**
Professor Alfred Nevhutanda **
Richard Linnell* (Chairman)(resigned 6 August 2012)
Simon Farrell** (Deputy Chairman) (resigned 6 August 2012)
Steve Bywater* (resigned 6 August 2012)
Mikki Xayiya* (resigned 6 August 2012)
Wayne Koonin** (Finance Director)(resigned 29 November 2012)
* Non executive director
** Executive director
Review of Operations
Principal activity and nature of operations
The principal activity of the Company and its subsidiaries (the "Group" or the "Consolidated Entity") is the
acquisition, exploration and development of thermal and metallurgical coal properties in South Africa.
The Group's principal assets and projects include:
- two coking and thermal coal projects, the Vele colliery and the Makhado project, in the development stage;
- two exploration and development stage coking and thermal coal complexes, the Chapudi Complex and the
Soutpansberg Complex, each comprising three large scale coal projects;
- two thermal coal collieries, the Mooiplaats Colliery and the Woestalleen Colliery; and
- approximately three million tonnes per annum port and rail capacity at the Matola Terminal in Maputo,
Mozambique.
The Group also has an interest in an analytical coal laboratory.
Operational summary
Operational summary for the six months under review, reported unless otherwise stated in United States
Dollars, include:
- Ten lost time injuries ("LTI's") during the period (FY2012 H2: five) including a vehicle incident at the
Mooiplaats thermal coal colliery ("Mooiplaats Colliery") in July 2012 where four employees were injured.
- 2,676,821 tonnes (FY2012 H2: 2,647,179 tonnes) of run of mine ("ROM") coal and 1,050,045 tonnes
(FY2012 H2: 1,214,539 tonnes) of export quality coal produced during the six months.
- Reduction in export coal sales to 636,264 tonnes (FY2012 H2: 863,893 tonnes) due to the reduction in
production volumes after the strike action that lasted for six weeks at the Mooiplaats Colliery, and the
impact of tippler upgrades at the Matola Terminal in Maputo, Mozambique ("Matola Terminal").
- On going pressure on index linked RB1 export quality thermal coal prices which declined from an average of
$100/tonne during the six months ended 30 June 2012 to an average of $87/tonne for the period ended
31 December 2012.
- Sales of export quality coal on the domestic market during the six months decreased 13.0% to 341,685
tonnes (FY2012 H2: 392,932 tonnes).
- Sales of middling coal increased 25.9% from 375,768 tonnes in the six months ended June 2012 to 473,154
tonnes for the December 2012 period. A new one year supply agreement was concluded with Eskom
Holdings Limited ("Eskom"), the South African state owned electricity utility, for the supply of coal on
improved terms.
- Agreement concluded with Beijing Haohua Energy Resource Company Limited's ("BHE") wholly owned
subsidiary, Haohua Energy International (Hong Kong) Company Limited ("HEI"), to subscribe for $100
million of CoAL shares at GBP0.25 per share. $20 million was received during the period and $80 million was
received post period end.
- Total gross equity capital raise of $53.5 million through a placing of $44.8 million with institutional investors
and an equity derivative facility of $8.7million with Investec Bank Limited.
Woestalleen Complex (Vuna colliery & Woestalleen processing facility) Witbank coal field (100%)
The Woestalleen processing facility recorded no LTI's (FY2012 H2: one LTI) and the Vuna colliery one LTI during
the six months (FY2012 H2: one LTI).
ROM coal produced by the Vuna colliery increased marginally in the December 2012 period from 1,823,709
tonnes to 1,839,466 tonnes. A portion of the #1 seam ROM coal mined at the colliery was delivered to Eskom
as raw coal and the remaining ROM coal processed to an export grade and middlings product.
The quantity of coal processed decreased 17.4% to 1,306,009 tonnes compared to 1,581,896 tonnes during the
previous six month period due to ROM coal sales to Eskom and scheduled December shutdowns. Woestalleen
produced 1,276,772 tonnes of saleable coal (FY2012 H2: 937,934), up 36.1%, comprising:
- 697,008 tonnes (FY2012 H2: 744,868 tonnes) of export quality coal, and
- 579,764 tonnes (FY2012 H2: 193,066 tonnes) of middlings product.
The Vuna colliery's coal reserve is expected to be depleted by the end of March 2013, at which time the supply
of ROM coal to the Woestalleen complex will cease. The Company continues to assess various options to
restructure the Woestalleen processing complex. In the interim, the Company has engaged all stakeholders in a
section 189(A) process notifying the 274 affected employees of the pending closure of the Vuna colliery and its
impact on the Woestalleen complex.
The Company also commenced a tender process for the sale of this asset. Various offers have been
received by the Company and are being evaluated.
Mooiplaats Colliery Ermelo coal field (100%)
Four of the eight LTI's recorded at the Mooiplaats Colliery during the six months (FY2012 H2: two LTI's) resulted
from an incident involving a mine vehicle transporting employees. The focus on improving safety management
at the mine has intensified.
Operations at the Mooiplaats Colliery were temporarily suspended at the end of September 2012 when the
176 National Union of Mineworkers ("NUM") members, of the 368 people employed at the colliery, embarked
on a protected wage related strike. A wage agreement was subsequently reached resulting in employees
returning to work on 1 November 2012. Access and operational capabilities at the colliery were limited during
the strike period resulting in the flooding of two of the underground sections and production delays. The
Company commenced a section 189(A) process in relation to the restructuring of the Mooiplaats Colliery on 6
November 2012.
On 3 December 2012, NUM affiliated employees at the colliery embarked on an unprotected strike protesting
against the suspension of four of their colleagues who had breached picketing rules and the terms of a court
interdict during the October strike. The colliery's remaining 190 employees re-commenced work on 7
December 2012 and, on 11 December 2012 the NUM affiliated employees returned to work.
The strike action at Mooiplaats was primarily responsible for ROM production decreasing by 41.4% to 388,100
tonnes (FY2012 H2: 662,363 tonnes) while coal processed declined from 804,125 tonnes in H2 FY2012
(including 146,746 tonnes of purchased ROM coal) to 387,767 tonnes. The colliery produced a total of 270,234
saleable tonnes (FY2012 H2: 556,801 tonnes) during the period, comprising:
- 226,719 tonnes (FY2012 H2: 423,605 tonnes) of export quality coal; and
- 43,515 tonnes (FY2012 H2: 133,196 tonnes) of middlings product for Eskom.
As part of the initiative to address the long term viability of the operation, the Company is assessing various
strategic restructuring alternatives which may include disposal.
Following the derailment on the Matola Corridor ("the derailment") on 18 February 2013, production at
Mooiplaats will continue until stockpile capacity is reached.
Vele Colliery Tuli coal field (100%)
The Vele coking and thermal coal colliery ("Vele Colliery") recorded one LTI during the six months (FY2012 H2:
nil LTI's) and achieved 1,000 fatality free production shifts during the reporting period.
During the period, Vele continued to produce export grade thermal coal to offset costs while the test trials on
potential metallurgical coal are being concluded. Vele produced 449,255 tonnes (FY2012 H2: 161,107 tonnes)
of ROM coal and 438,501 tonnes (FY2012 H2: 162,289 tonnes) of coal was processed during the period yielding
126,318 tonnes (FY2012 H2: 46,066 tonnes) of saleable export quality thermal coal.
The intended plant expansion at Vele will result in improved yields and operational efficiencies.
The plant expansion has been divided into two phases:
- Phase 1 will allow for the de watering of the ultra fines product by installing filter presses eliminating the
need for the temporary slurry pond and is scheduled for completion early in the second quarter of CY2013.
Phase 2 construction is expected to commence in CY2013 and be completed in the second half of CY2014.
- The approval of Vele Phase 2 by the board is subject to the completion of product testing currently
underway. This phase includes the installation of a permanent ROM tip and crushing facility, primary &
middlings coal wash plant modules as well as a fines recovery plant.
The Vele Colliery Environmental Management Committee ("EMC") and sub committees are operating
effectively and comprise representatives from the relevant government departments, non governmental
organisations, municipalities, farming communities and other stakeholders. During the period the Save
Mapungubwe Coalition joined the EMC as full members.
Production at Vele Colliery has been temporarily suspended following the derailment primarily to reduce
operating cash costs during this period and the lack of stockpile capacity.
Makhado Coking Coal Project Soutpansberg coal field (100%)
On 15 March 2013 the Company confirmed that the Makhado coking and thermal coal project ("Makhado
Project") has the potential to produce a hard coking coal. The Company engaged Wood Mackenzie who are
leading independent experts in coal salesto verify the expected product quality and marketability of the coal
and has assessed the typical quality of the coal at Makhado to be hard coking coal based on its specifications
relative to other international coking coal producers. The consideration was based on the global outlook for
coking coal and the coal quality parameters that contribute to Makhado's value in use in order to estimate the
attractiveness of the coal in selected target markets. These markets are closely aligned to the key growth
destinations for seaborne coking coal.
During the interim period the Makhado Project Definitive Feasibility Study ("DFS") on the opencast mining
area, which includes both hard coking coal and a thermal coal fraction, was upgraded to provide greater
operational certainty and reduced project risk. The Company expects that the additional work on the DFS will
be completed and released during Q2 CY2013.
CoAL continued to make progress on the acquisition of various properties required for the Makhado Project rail
infrastructure and operations. The Company purchased or has an option to acquire the remaining properties
required for the rail load out and rail spur for the Makhado project with the exception of the properties
discussed below. Negotiations to acquire the two properties where the planned processing plant and initial
opencast mining is to commence have not been concluded. The granting of the Makhado Project New Order
Mining Right ("NOMR") will result in CoAL having legislated rights in terms of the Mineral and Petroleum
Resources Act (2002) allowing the construction of the mine and related infrastructure to commence.
During the period, the Company and the Nzhelele Farmers signed a Memorandum of Agreement ("MOA") in
respect of the more efficient use of water in the Nzhelele River catchment area of Limpopo Province, South
Africa. The signing of the MOA enabled the submission of the Makhado Project Integrated Water Use Licence
Application. Under the terms of the MOA, the Nzhelele Farmers relinquished portions of their water use
entitlements facilitating a bulk water supply for the Makhado Project. The parties have undertaken to form a
technical working group with the aim of identifying projects which would replenish the allocation relinguished
by the farmers.
The Company has made significant progress on the regulatory requirements relating to the NOMR Application.
The BEE shareholding, required under South African mining legislation is work in progress as the Company
needs to ensure that funding is a requirement in order to progress the project. It is envisaged a BEE partner will
provide a pro rata share of funding required to develop the project.
Greater Soutpansberg Project Soutpansberg Coalfield (74%)
The Company has commenced with the work necessary to submit NOMR Applications for the Chapudi, Mopane
and Makhado Extension projects. During the period under review CoAL continued with the process of
compiling the exploration and technical data on these projects. The Company initiated exploration programmes
on the properties in early CY2013 and a total of 39 small and 42 large diameter holes are planned to be drilled
over the next six months, with further updates on the technical results to follow in due course.
Rio Tinto Chapudi coal asset acquisition
The share purchase agreement to acquire the Rio Tinto Chapudi coal assets was amended to enable the sale of
equity and of shareholders' claims, totalling $75.0 million, to close separately. The Company was able to
restructure the payment terms and paid $9,634,740 of the shareholder claims portion during the reporting
period and the outstanding $4 million for these claims was paid in February 2013. The $30.0 million balance of
the total purchase price will become payable on the earlier of the receipt of a NOMR on any of the properties
that form part of the transaction or, two years from 11 May 2012, the date upon which the conditions
precedent for the equity sale were fulfilled.
Strategic Partner Beijing Haohua Energy Resource Co. Limited
At the end of September 2012, BHE through its subsidiary HEI submitted a binding offer to provide the
Company with $100.0 million of equity funding with the transaction to be executed in two stages:
- an initial placement of $20.0 million, completed during the reporting period; and
- a conditional placement of $80.0 million ("Conditional Placement").
All necessary Peoples Republic of China ("PRC"), CoAL shareholder, regulatory and statutory approvals required
for the Conditional Placement were satisfied in January 2013 and HEI subscribed for a further $80.0 million of
shares in CoAL at GBP0.25 per share. The parties have commenced discussions regarding co operation on
commercial, technical and operational matters enabling the Company to draw on BHE's expertise during the
development of the Makhado Project as well as the Chapudi, Mopane and Makhado Extension projects.
Equity Issue
During the period the Company raised a total amount of $53.5 million (before costs) of which 115,478,798
shares were placed with institutional investors at GBP0.25 per share raising $44.8 million and Investec Bank
Limited subscribed for 19,148,408 million CoAL shares under an equity derivative financing package raising
approximately $8.7 million. At the end of the period, approximately $4.3 million of this facility was outstanding.
Financial review (all amounts expressed in US Dollars unless stated otherwise)
Revenue from the sale of coal for the six months totaled $87.3 million compared to $125.8 million for the
comparative period due to lower coal prices and reduced production as a result of the strike action and
subsequently, lower sales volumes.
The loss for the six months under review amounted to $111.7 million, or 14.39 cents per share compared to a
loss of $74.7 million or 13.36 cents per share for the prior corresponding period.
The loss for the period under review of $111.7 million (2011: $74.7 million) includes non cash charges of $98.3
million (2011: $70.3 million) as follows:
- impairment loss of $50.0 million ($1.9 million in the six months ended 31 December 2011);
- net foreign exchange losses of $21.6 million (2011: $42.6 million) of which $22.1 million (2011: $39.9
million) represent unrealised losses arising from the translation of inter group loan balances, borrowings
and cash due to change in the South African Rand:United States Dollar exchange rate period on period;
- depreciation of $9.8 million (2011: $8.5 million) and amortisation of $9.4 million (2011: $20 million)
contributed further to the non cash charges;
- loss of $2.7 million due to the discount on early settlement of the Grindrod receivable (2011: nil);
- loss of $4.3 million (2011: nil) on the fair value adjustment of the Investec equity derivative financing
package.
The increase in the loss for the six months when compared to the prior corresponding period is as a result of a
$50.0 million impairment loss recognized on Mooiplaats ($1.9 million in the six months ended 31 December
2011 on assets held for sale). The impairment loss arose from the following factors:
- continued losses suffered at the operation on a monthly basis due to lower coal prices and production
targets not met;
- strike action during the month of September 2012 resulting in lower production volumes; and
- relatively higher logistics cost applicable to this colliery.
The above mentioned resulted in headline loss per share (as explained in note 11 to the financial report)
improving to 7.95 cents per share during the six months under review from 13.02 cents per share in the prior
corresponding period, due to the exclusion of impairment losses from the calculation on a headline basis.
As at 31 December 2012, the Company had cash and cash equivalents of $18.3 million compared to cash and
cash equivalents of $19.5 million at 30 June 2012.
As at 31 December 2012, the available facility with Deutsche Bank totalled $37.5 million. The actual utilisation
of the facility as at this date was $37.5 million. The facility is subject to certain covenants associated with a
facility of this nature. As a result of the strike action in October 2012 at the Mooiplaats Colliery and the
subsequent loss in production together with the unrealised loss associated with the loan in the books of
Langcarel (Pty) Ltd (a wholly owned subsidiary of the Company), the total equity measure fell below the set
equity covenant threshold. Notice of this breach was communicated to Deutsche Bank and the Company
considers that this breach has not resulted in any change to the ability of the Company to meet its repayment
obligations.
Authorised and issued share capital
At 31 December 2012, Coal of Africa Limited had 800,951,034 fully paid ordinary shares in issue. The holders of
ordinary shares are entitled to one vote per share and are entitled to receive dividends when declared.
Dividends
No dividends were declared or paid during the six months.
Highlights and events after the reporting period
- Confirmation of Makhado coal as a world class hard coking coal with good coke strength. Wood Mackenzie
who were engaged to review the coal to be produced at the Makhado Project have confirmed that it has
the potential to be a world class hard coking coal. Memorandum of Understanding ("MOU") signed
appointing Vitol as the Company's marketing agent for all export thermal and coking coal for eight years,
except for Makhado product where the marketing period is five years from start of production. The MOU
excludes all current agreements and potential coal off take arrangements with the Company's strategic
equity partners.
- Agreement with Grindrod to remove CoAL's funding obligation for the Phase 4 expansion of the Matola
Terminal. Additional throughput volumes will be contracted for on a take or pay basis.
- PRC regulatory approval for HEI's $100.0 million investment in the Company and CoAL shareholder approval
of the transaction resulting in the Company receiving $80.0 million on 31 January 2013 from HEI and the
issuance of 247,417,599 CoAL shares.
- Heavy rainfall and resultant flooding resulted in the stoppage of operations at the Vele Colliery. Limited
operations re commenced with production returning to normal levels during the first week of February
2013.
- The derailment of 10 wagons on the Maputo rail corridor on 18 February 2013 led to the damage of a rail
bridge resulting in the suspension of all traffic between Komatipoort and Maputo, until approximately the
end of March 2013.Transnet Freight Rail has been unsuccessful in establishing alternative routes to the Port
of Matola. Accordingly Vele, Mooiplaats and Woestalleen collieries issued force majeure notices to their
customers, contractors and affected stakeholders. The Company has implemented measures at all
operations to mitigate the commercial and operational impact of the force majeure. Although Vele
operations were temporarily suspended due to existing stockpiles and limited remaining capacity at both
the plant and siding, production at Mooiplaats and Woestalleen will continue until the stockpile capacity
has been fully utilized.
Outlook
The Company is considerably better placed following the strategic investment by BHE however certain
elements of the turnaround strategy remain work in progress. These include possible restructuring or sale of
Mooiplaats colliery, Woestalleen colliery and related assets. The Company is also continuing discussions with
various financial institutions to secure new short and long term debt facilities. In addition finalisation of the
Vele coal product trials is required in order to complete the phase two capital programme.
Corporate Activity
As part of the Company's drive to reduce overhead costs and the closure of its Perth and London offices, Mr
Tony Bevan was appointed Company Secretary of CoAL. Mr Bevan works for Endeavour Corporate Pty Ltd
based in Perth, Australia, which has been engaged to provide company secretarial services to CoAL. Mr Bevan is
a Chartered Accountant with over 25 years' experience and is an experienced company secretary.
Auditor's Independence Declaratio
A copy of the auditor's independence declaration as required under Section 307C of the Corporations Act 2001
is set out on page 31.
The half year report set out on paages 11 to 30 which has been approved on the going concern basis, was
approved by the board on 14 March 2013 and wa signed on it behalf by:
John Wal llington
Chief Executive Officer
Dated at Johannesburg South Africa this 14th day of March 2013
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE HALF YEAR ENDED 31 DECEMBER 2012
6 months 6 months
ended ended
31 December 31 December
2012 2011
Note $'000 $'000
Revenue 9 87, 771 143,855
Cost of sales direct (86,901) (124,386)
Gross profit 870 19,469
Other operating expenses (119,892) (96,866)
Operating loss 10 (119,022) (77,397)
Finance income 415 560
Finance costs (914) (1,687)
Loss before tax (119,521) (78,524)
Income tax credit 7,851 3,830
Loss after income tax (111,670) (74,694)
Other Comprehensive Income, net of income tax
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 18,933 (15,843)
Total comprehensive loss for the period (92,737) (90,537)
Loss attributable to:
Owners of the Company (111,670) (74,694)
(111,670) (74,694)
Total comprehensive loss attributable to:
Owners of the Company (92,737) (90,537)
(92,737) (90,537)
Loss per share
Basic and diluted (cents per share) 11 14.39 13.36
The accompanying notes form part of these half year financial statements
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2012
31 December 30 June
2012 2012
Note $'000 $'000
ASSETS
Non current assets
Exploration and evaluation expenditure 161,735 156,270
Development expenditure 140,769 127,216
Property, plant and equipment 6 72,205 141,641
Intangible assets 18,846 18,757
Other receivables 7 4,154 13,811
Other financial assets 16,839 13,173
Restricted cash 13,161 11,976
Deferred tax assets 3,361 3,444
Total non current assets 431,070 486,288
Current assets
Inventories 23,112 22,058
Trade and other receivables 27,270 25,968
Cash and cash equivalents 18,292 19,523
Total current assets 68,674 67,549
TOTAL ASSETS 499,744 553,837
LIABILITIES
Non current liabilities
Contingent consideration 30,000 30,000
Borrowings 8 55 66
Provisions 16,214 16,916
Deferred tax liabilities 6,454
Total non current liabilities 46,269 53,436
Current liabilities
Trade and other payables 68,550 72,441
Borrowings 8 43,961 49,063
Provisions 3,829 1,475
Current tax liabilities 85 155
Total current liabilities 116,425 123,134
TOTAL LIABILITIES 162,694 176,570
NET ASSETS 337,050 377,267
EQUITY
Issued capital 5 843,141 791,102
Accumulated deficit (671,916) (564,800)
Reserves 165,250 150,390
Equity attributable to owners of the Company 336,475 376,692
Non controlling interests 575 575
TOTAL EQUITY 337,050 377,267
The accompanying notes form part of these half year financial statements
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF YEAR ENDED 31 DECEMBER 2012
Issued capital Accumulated Share based Capital Foreign Attributable Non- Total equity
deficit payment profits currency to owners of controlling
reserve reserve translation the parent interests
reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 July 2012 791,102 (564,800) 87,180 91 63,119 376,692 575 377,267
Total comprehensive loss for the period - (111,670) - - 18,933 (92,737) - (92,737)
Loss for the period - (111,670) - - - (111,670) - (111,670)
Other comprehensive loss, net of tax - - - - 18,933 18,933 - 18,933
791,102 (676,470) 87,180 91 82,052 283,955 575 284,530
Shares issued for capital raising 54,250 - - - - 54,250 - 54,250
Share issue costs (2,211) - - - - (2,211) - (2,211)
Share based payments - - 481 - 481 - 481
Share options expired - 4,554 (4,554) - - - - -
Balance at 31 December 2012 843,141 (671,916) 83,107 91 82,052 336,475 575 337,050
Balance at 1 July 2011 686,577 (429,589) 88,967 91 84,170 430,216 575 430,791
Total comprehensive loss for the period - (74,694) - - (15,843) (90,537) - (90,537)
Loss for the period - (74,694) - - - (74,694) - (74,694)
Other comprehensive loss, net of tax - - - - (15,843) (15,843) - (15,843)
686,577 (504,283) 88,967 91 68,327 339,679 575 340,254
Shares issued for capital raising 104,914 - - - - 104,914 - 104,914
Share issue costs (3,544) - - - - (3,544) - (3,544)
Shares issued on exercise of options 509 - - - - 509 - 509
Share based payments - - 623 - - 623 - 623
Shares issued as part of bonus 136 - - - - 136 - 136
Balance at 31 December 2011 788,592 (504,283) 89,590 91 68,327 442,317 575 442,892
The accompanying notes form part of these half year financial statements
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF YEAR ENDED 31 DECEMBER 2012
6 months ended 6 months ended
31 December 31 December
2012 2011
$'000 $'000
Cash Flows from Operating Activities
Receipts from customers 90,279 138,477
Payments to employees and suppliers (121,802) (156,251)
Cash used in operations (31,523) (17,774)
Interest received 342
Interest paid (676) (598)
Income taxes paid (3,212)
Net cash used in operating activities (31,857) (21,584)
Cash Flows from Investing Activities
Purchase of property, plant and equipment (2,395) (4,819)
Increase in restricted cash (1,475) (142)
Proceeds from the sale of property, plant and equipment
Purchase of mineral properties (9,802)
Capitalised exploration and evaluation expenditure (11,749) (12,452)
Increase in other financial assets (724) (335)
Payments for development assets (17,993)
Net cash used in investing activities (44,138) (17,748)
Cash Flows from Financing Activities
Proceeds from the issue of shares and options, net of costs 53,631 106,576
Share issuance costs (2,221) (3,544)
Proceeds received from BHE 20,000
Repayment of borrowings (157)
Proceeds from borrowings 4,897 10,163
Finance lease repayments (911) (1,819)
Net cash generated by financing activities 75,239 111,376
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (756) 72,044
Cash and cash equivalents at the beginning of the half year 19,523 22,761
Foreign exchange differences (475) (4,669)
Cash and cash equivalents at the end of the half year 18,292 90,136
The accompanying notes form part of these half year financial statements
NOTES TO THE CONDENSED CONSOLIDATED HALF YEAR REPORT
FOR THE HALF YEAR ENDED 31 DECEMBER 2012
1. CORPORATE INFORMATION
The financial report of Coal of Africa Limited ("CoAL" or the "Company") for the half year ended 31
December 2012 was authorised for issue in accordance with a resolution of the directors on
14 March 2013. CoAL is a company incorporated in Australia and limited by shares, which are publicly
traded on the Australian Securities Exchange ("ASX"), the AIM market of the London Stock Exchange
("AIM") and the Johannesburg Stock Exchange ("JSE").
The nature of the operations and principal activities of the Company and its subsidiaries (the "Group" or
the "Consolidated Entity") are described in the Directors' Report.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The half year financial report is a general purpose financial report prepared in accordance with the
requirements of the Corporations Act 2001 and AASB 134: Interim Financial Reporting. Compliance with
AASB 134 ensures compliance with International Accounting Standard 34 Interim Financial Reporting. The
half year report does not include notes of the type normally included in an annual financial report and
should be read in conjunction with the most recent annual financial report.
Basis of preparation
The half year condensed consolidated financial statements have been prepared on the basis of historical
cost, except for the revaluation of financial instruments. Cost is based on the fair values of the
consideration given in exchange for assets.
All amounts are presented in United States dollars, unless otherwise noted.
The accounting policies and methods of computation adopted in the preparation of the half year financial
report are consistent with those adopted and disclosed in the company's 2012 annual financial report for
the financial year ended 30 June 2012, except for the impact of the Standard and Interpretations described
below. These accounting policies are consistent with the Australian Accounting Standards and with
International Financial Reporting Standards ("IFRS"). The Group has revised the presentation of its
consolidated financial statements from those reported as at and for the year ended 30 June 2012 and
those reported as at and for the half year ended 31 December 2011. These revisions had no impact on net
loss, total assets or total equity.
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian
Accounting Standards Board ("the AASB") that are relevant to their operations and effective for the current
reporting period.
New and revised Standards and amendments thereof and Interpretations effective for the current half year
that are relevant to the Group include:
- Amendments to AASB 1, 5, 7, 101, 112, 120, 121, 132, 133 and 134 as a consequence of AASB 2011 9
'Amendments to Australian Accounting Standards Presentation of items of Other Comprehensive
Income'
The adoption of all the new and revised Standards and Interpretations has not resulted in any changes to
the Group's accounting policies and has no effect on the amounts reported for the current or prior half
years. However, the application of AASB 2011 9 has resulted in changes to the Group's presentation of, or
disclosure in, its half year financial statements.
AASB 2011 9 introduces new terminology for the statement of comprehensive income and income
statement. Under the amendments to AASB 101, the statement of comprehensive income is renamed as a
statement of profit or loss and other comprehensive income and the income statement is renamed as a
statement of profit or loss. The amendments to AASB 101 retain the option to present profit or loss and
other comprehensive income in either a single statement or in two separate but consecutive statements.
However, the amendments to AASB 101 require items of other comprehensive income to be grouped into
two categories in the other comprehensive income section: (a) items that will not be reclassified
subsequently to profit or loss and (b) items that may be reclassified subsequently to profit or loss when
specific conditions are met. Income tax on items of other comprehensive income is required to be allocated
on the same basis the amendments do not change the option to present items of other comprehensive
income either before tax or net of tax. The amendments have been applied retrospectively, and hence the
presentation of items of other comprehensive income has been modified to reflect the changes. Other
than the above mentioned presentation changes, the application of the amendments to AASB 101 does not
result in any impact on profit or loss, other comprehensive income and total comprehensive income.
3. GOING CONCERN
The financial report has been prepared on the going concern basis, which contemplates the continuity of
normal business activities and the realisation of assets and the settlement of liabilities in the normal course
of business.
The Consolidated Entity has incurred a net loss after tax for the half year ended 31 December 2012 of
$111.7 million (31 Dec 2011: loss of $74.7 million), including a non cash impairment of $50.0 million on the
Mooiplaats Colliery, realised and unrealised foreign exchange losses of $21.6 million and depreciation and
amortisation charges of $19.2 million. During the six month period under review, net cash outflows from
operating activities were $31.8 million (31 Dec 2011 net outflow: $21.6 million) and net cash outflows from
investing activities were $44.1 million (31 Dec 2011 net outflow: $17.7 million). As at 31 December 2012
the Consolidated Entity had a net current liability position of $47.7 million (31 Dec 2011: net current
liabilities of $55.6 million), excluding assets and liabilities classified as held for sale.
As part of the process to raise additional funding for the business during the reporting and subsequent
period, the Company has performed the following fundraising activities:
- In July 2012, CoAL entered an equity derivative based funding arrangement with Investec Bank Limited
to subscribe for a total of 19,148,408 CoAL shares, comprising 16,850,599 shares at a subscription price
of GBP0.29 per share and 2,297,809 shares at A$0.437 per share, raising approximately $8.7 million.
- On 6 August 2012, CoAL placed 115,478,798 new shares with institutional investors at a price of GBP0.25
per share (ZAR3.25) to raise gross proceeds of $44.8 million (GBP28.9 million/ ZAR375.5 million).
- On 30 September 2012, an agreement was concluded with Beijing Haohua Energy Resource Company
Limited's ("BHE") wholly owned subsidiary, Haohua Energy International (Hong Kong) Company Limited
("HEI"), to subscribe for $100.0 million of CoAL shares at GBP0.25 per share. The Company received
$20.0 million on 29 November 2012 and $80.0 million on 31 January 2013, completing the total
transaction.
The Company had a $50 million thermal coal export finance facility with Deutsche Bank Amsterdam ("DBA
facility"), of which $37.5 million was drawn down at 31 December 2012. No further drawdowns can be
made under this facility. The repayment of the outstanding balance at $4.15 million per month commenced
on 23 January 2013 and at the date of this report, the Company has repaid $8.3 million while $29.2 million
remained outstanding. Repayments will continue on a monthly basis until fully repaid by 23 September
2013.
As disclosed in Note 8 to the financial report, certain financial covenants with respect to the DBA facility
were breached. In terms of the facility agreement, a breach of this nature may constitute an event of
default and could result in the outstanding balance becoming due and payable. Notice of this breach was
communicated to Deutsche Bank Amsterdam during the current and previous reporting periods and as a
result of these ongoing breaches, there continues to be regular dialogue between CoAL and Deutsche Bank
Amsterdam on the overall management of the facility. Meanwhile the repayment of the outstanding
balance continues in the ordinary course.
During the period ended 31 December 2012 the Company identified certain key deliverables to ensure that
the Consolidated Entity continues as a going concern and the following were achieved at the date of
signing this report:
- The payment terms of the $13.6 million due on 8 October 2012 for Rio Tinto's Chapudi assets were
successfully restructured into three separate tranches, with the last instalment of $4.2 million paid on
28 February 2013.
- The replacement of certain cash backed environmental rehabilitation guarantees with insurance backed
guarantees was completed by 31 January 2013, generating a net cash inflow of $6.2 million.
- The settlement of the Grindrod loan receivable of $11.2 million (which was to be repaid over seven
years) was successfully re negotiated by 31 December 2012, with a net cash inflow of $8.75 million
received subsequent to the reporting period.
- The Company commenced a tender process for the sale of the Mooiplaats Colliery and related
assets. Various offers for these assets have been received by the Company and are being
evaluated.
Over the next six to twelve months, the Directors have identified certain key deliverables to ensure that the
Consolidated Entity continues as a going concern. The ability of the Consolidated Entity to continue as a
going concern and to pay its debts as and when they fall due is dependent on:
- the sale or restructuring of the Mooiplaats Colliery and related assets by September 2013;
- continued discussions with various financial institutions to secure new short and long term debt
facilities;
- The Company is also reviewing all discretionary expenditures including administration, exploration and
development costs, and where necessary these costs will be minimised or deferred to suit the
Consolidated Entity's cash flow from operations. This includes the active management of working
capital commitments;
- management of the repayment of the existing DBA facility in the ordinary course; and
- continued discussions with BHE as a strategic partner, in particular on the future development of the
Makhado and Greater Soutpansberg projects
- future capital raisings where required.
At the date of this report and having considered the above factors, the Directors are confident that the
Consolidated Entity will be able to continue as a going concern.
In the event that the Consolidated Entity does not achieve successful outcomes in relation to the matters
set out above, significant uncertainty would exist as to the ability of the Consolidated Entity to continue as
a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the normal
course of business and at the amounts stated in the financial report.
The financial report does not include adjustments relating to the recoverability and classification of
recorded asset amounts, nor to the amounts and classification of liabilities that might be necessary should
the Consolidated Entity not continue as a going concern.
4. DIVIDENDS
No dividend has been paid or is proposed in respect of the half year ended 31 December 2012 (2011:
None).
5. ISSUED CAPITAL
31 December
2012
$'000
800,951,034 (2011: 666,323,828) fully paid ordinary shares 843,141
Movements in issued capital
Opening balance 1 July 2012 791,102
Shares issued on exercise of options
Shares issued as part of bonus
Shares issued for capital raising, net of costs 52,039
843,141
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
On 18 July 2012, CoAL successfully completed an equity funding arrangement whereby 19,148,408 new
ordinary shares in CoAL were issued to Investec Bank Limited ("Investec"). Investec subscribed for
16,850,599 shares at 29.21 pence per share and 2,297,809 shares at 43.70 cents (Australian), representing
a 5% discount to the closing price of CoAL shares on AIM of 30.75 pence and the closing price on the ASX of
46.00 cents, respectively.
On 6 August 2012, CoAL successfully placed 115,478,798 new shares with institutional investors. The
placing price was set at 25 pence per share. The placing price represented a discount of 1.96% to the
closing mid market price on AIM and was done in two tranches. The first tranche of 80,570,166 was issued
on 6 August 2012.
On 11 September 2012, the second tranche of 34,908,632 new shares were placed with institutional
investors at 25 pence per share as part of the capital raising that commenced on 6 August 2012.
Options
The following unlisted options to subscribe for ordinary fully paid shares are outstanding at 31 December
2012:
Number Issued Exercise Price Expiry Date
5,000,000 A$2.74 30 November 2014
818,500 A$1.90 30 June 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 30 June 2016
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.
6. PROPERTY, PLANT AND EQUIPMENT
Mining Land and Leasehold Motor Other Total
property, buildings improve vehicles
plant and ments
equipment
$'000 $'000 $'000 $'000 $'000 $'000
December 2012
Cost
At beginning of period 427,898 24,348 678 1,839 2,817 457,580
Additions 1,984 20 220 237 2,461
Foreign exchange 1,150 (555) (13) (45) (62) 475
At end of period 431,032 23,813 665 2,014 2,992 460,516
Accumulated depreciation
At beginning of period 188,777 1,325 462 694 1,445 192,703
Amortisation 9,129 9,129
Depreciation charge 8,767 462 72 152 342 9,795
Exchange differences 2,767 (3) (9) (17) (30) 2,708
At end of period 209,440 1,784 525 829 1,757 214,335
Accumulated Impairment
At beginning of period 123,236 123,236
Impairment 50,000 50,000
Exchange differences 740 740
At end of period 173,976 173,976
Net carrying value at end
of period 47,616 22,029 140 1,185 1,235 72,205
31 Dec 2012 30 June 2012
$'000 $'000
The carrying amounts of the respective collieries included in property, plant and
equipment at period end are:
Mooiplaats 42,332 98,597
Woestalleen 4,909 16,875
47,241 115,472
Impairment disclosures
The above mining assets have been assessed for impairment by comparing the carrying value against the lower of the fair
value less cost to sell, or the value in use calculations of each coal project (which represents individual cash generating
units).
Due to the continued losses suffered at Mooiplaats, the value in use calculation was not deemed appropriate. In order to
assess impairment, the carrying value of the project was compared to the realisable value. The realisable value is based on
the fair value less cost to sell. The Directors' determined the fair value of Mooiplaats based on the valuation of tangible
assets with the help of external consultants.
Based on the realisable value, the Mooiplaats Colliery was impaired as a result of:
a) Continued losses suffered at the operation on a monthly basis due to lower coal prices and production targets not
met;
b) Strike action during the month of September 2012 resulting in lower production volumes; and
c) Relatively higher logistics cost applicable to this colliery.
The value in use calculation for Woestalleen did not indicate any impairment as this asset is reaching the end of its useful
life.
7. OTHER RECEIVABLES
The Company entered into an agreement with Grindrod Trading & Shipping Limited ("Grindrod") on 12
January 2009 whereby the Company exercised its option under the Grindrod option agreement and
advanced loan funding of $16.0 million, with a stated rate of interest of zero percent, to Grindrod (the
'Grindrod Loan') The Grindrod Loan was used for the phase three expansion to increase the annual
throughput capacity at the Maputo Terminal and CoAL received access to an additional approximately two
mtpa of throughput capacity from March 2011 and will continue as per the throughput agreement.
On 31 December 2012, the Grindrod Loan was settled early for an amount of $8.5 million, being the
discounted present value over the remaining six year term. As at 31 December 2012, the $8.5 million was
not received and is included in Trade and Other Receivables.
Other receivables are made up as follows:
31 December 30 June
2012 2012
$'000 $'000
Grindrod loan 11,200
Other loans 4,154 2,611
4,154 13,811
8. BORROWINGS
The Company, through its wholly owned subsidiary Langcarel (Pty) Ltd has a revolving thermal coal export
finance facility for up to $50.0 million with Deutsche Bank AG, Amsterdam. In terms of the repayment
clause in the facility, the total amount of the facility started to decrease by one twelfth in October 2012. As
at 31 December 2012, the available facility totalled $37.5 million. The actual utilisation of the facility as at
this date was $37.5 million.
The facility is subject to certain covenants associated with a facility of this nature. As a result of the strike
action in October 2012 at the Mooiplaats Colliery and the subsequent loss in production together with the
unrealised foreign exchange loss associated with the loan in the books of Langcarel (Pty) Ltd, the total
equity measure fell below the set equity covenant threshold.
Notice of this breach was communicated to Deutsche Bank and the Company considers that this breach has
not resulted in any change to the ability of the Company to meet its repayment obligations.
Borrowings are made up as follows:
31 December 30 June
2012 2012
$'000 $'000
Deutsche Bank Revolving facility 38,312 32,469
Rio Tinto 4,206 13,785
Other 1,498 2,875
44,016 49,129
9. REVENUE
Revenue for the six months includes:
31 December 31 December
2012 2011
$'000 $'000
Sale of product 87,255 125,807
Other revenue 516 1,534
Revenue from Nimag 16,514
87,771 143,855
10. OPERATING LOSS
Loss for the period has been arrived at after charging / (crediting):
6 months ended 6 months ended
31 December 31 December
2012 2011
$'000 $'000
Employee benefit expenses
Share based payments 481 623
Other employee benefits 6,992 4,871
Total employee benefits 7,473 5,494
Depreciation and amortisation
Depreciation on property, plant and equipment 9,795 8,455
Amortisation of mining properties 9,129 19,480
Amortisation of intangible assets 305 606
Total depreciation and amortisation 19,229 28,541
Other gains and losses
Loss due to discount on early settlement of loan 2,700
Fair value adjustment 4,300
Foreign exchange losses 21,588 42,565
28,588 42,565
Impairment losses
Impairment loss on mining assets 50,000
Impairment loss on assets held for sale 1,927
50,000 1,927
11. LOSS PER SHARE
Basic loss per share
The calculation of basic loss per share at 31 December 2012 was based on the loss attributable to ordinary
equity holders of the Company of $111.67 million (2011: $74.69 million) and a weighted average number
of ordinary shares outstanding during the period ended 31 December 2012 of 775,886,462 (2011:
558,969,237), calculated as follows:
6 months ended 6 months ended
31 December 31 December
2012 2011
$'000 $'000
Loss for the period attributable to ordinary shareholders
Loss attributable to owners of the Company ($'000) 111,670 74,694
Weighted number of ordinary shares
Weighted number of ordinary shares ('000) 775,886 558,969
Basic loss per share (cents per share) 14.39 13.36
Diluted loss per share
Due to the loss incurred, there is no dilutive effect from share options.
Headline loss per share (In line with JSE listing requirements)
The calculation of headline loss per share at 31 December 2012 was based on the headline loss attributable
to ordinary equity holders of the Company of $61.67 million (2011: $72.8 million) and a weighted average
number of ordinary shares outstanding during the period ended 31 December 2012 of 775,886,462 (2011:
558,969,237).
The adjustments made to arrive at the headline loss are as follows:
6 months ended 6 months ended
31 December 31 December
2012 2011
$'000 $'000
Loss for the period attributable to ordinary shareholders 111,670 74,694
Adjust for:
Impairment losses (50,000) (1,927)
Headline earnings 61,670 72,767
Headline loss per share (cents per share) 7.95 13.02
12. CONTINGENT LIABILITIES
In accordance with normal industry practice, the Company has agreed to provide financial support to its
controlled entities.
The Group is currently involved in litigation as outlined below ($ amounts presented within have been
computed using the exchange rate as at 31 December 2012 unless otherwise stated):
Ferret Mining and Environmental Services (Pty) Ltd ("Ferret") / RH Boer, JA Nel ("Nel"), Coal Of Africa
Limited And GVM Metals Limited
Ferret alleges that the previous owner (Nel) of Mooiplaats Mining Limited ("Mooiplaats Mining") lacked
ownership to 26% of the shareholding in Mooiplaats Mining, sold to the Company, as those shares
belonged to Ferret. Ferret has claimed restitution of 26% of the issued share capital of Mooiplaats Mining.
If Ferret is successful in its claim and becomes entitled to the shares in Mooiplaats Mining, the Company
has received legal advice that Nel (the second respondent in the Ferret claim) will in any event be obliged
to compensate the Company due to the fact that he lacked legal ownership of the shares at the time when
the Company purchased them from him. In this regard, the Company has instituted a contingent
counterclaim against Nel. Ferret as the plaintiff has not yet applied for a date for the hearing of its
application, and it is unlikely that a date will be heard by the court before September 2013.
The Company has evaluated the details of the case and if Ferret is successful in obtaining restitution of 26%
of the issued share capital in Mooiplaats Mining by means of a court order, the Company will pursue its
counterclaim against Nel for approximately $13.2 million (ZAR112.0 million) representing the purchase
price of the 26%.
Motjoli Resources (Pty) Ltd & Motjoli Resources Advisory Services cc (together "Motjoli") / Coal of Africa,
Mooiplaats Mining Ltd and JA Nel
Motjoli were appointed as consultants to obtain the granting of a NOMR for Mooiplaats Mining's
subsidiary, Langcarel (Pty) Ltd, and to obtain Section 11 approval for the transaction between the Company
and Nel for the sale of 100% of the shareholding in Mooiplaats Mining. The fees to be paid were
approximately $0.5 million (ZAR4.0 million), plus the issue of 4,750,000 paid up ordinary shares in the
Company. Nel was to transfer the 4,750,000 paid up shares in the Company, issued to him on 10 April
2008, to Motjoli.
Motjoli contends that it complied with its obligations and while it received cash of approximately $0.5
million (ZAR4.0 million), the Company and Nel did not settle their obligation to issue and transfer 4,750,000
paid up ordinary shares in the Company to Motjoli. In addition, Motjoli claims that it should be awarded
4,750,000 paid up ordinary shares in the Company and the difference between the current value of the
shares and an amount of approximately $11.3 million (ZAR95.5 million) with interest by the defendants
jointly and severally.
The trial was initially set down for hearing on 7 November 2011. The parties subsequently agreed to refer
the matter to arbitration which was scheduled to take place in February 2013 and has been postponed
until September 2013.
As the Company does not currently believe that a loss is probable, no provision for any liability has been
recorded.
Envicoal (Pty) Ltd ('Envicoal') / Nucoal Mining (Pty) Ltd ("NuCoal")
In 2010 Envicoal launched arbitration proceedings against NuCoal claiming that NuCoal failed to deliver
coal as prescribed in terms of the agreement leading to the cancellation of second supply agreement
concluded between the parties. In January 2013, Envicoal amended its damages claim and increased the
quantum of its damages to approximately $18.4 million (ZAR155.8 million).
The arbitration proceedings are scheduled for August 2013.
The Company is evaluating the details of the case and will defend the amended claims on their merits. As
the Company does not currently believe that a loss is probable no provision for any liability has been
recorded.
Investec Equity Derivative Financing Package
During the period the Company entered into an Equity Derivative Financing Package with Investec raising
approximately $8.7 million. At the end of the period, approximately $4.3 million of this facility was
outstanding. Although the outstanding balance has been accrued for, the ultimate settlement will depend
on the share price.
Termination benefits
Subsequent to the announcement of the resignation of Mr Wayne Koonin on 29 November 2012 the
company has entered negotiations with Mr Koonin regarding the final terms of his settlement which are
informed by the 22 June 2012 shareholder approved "Termination Benefits". The Company and Mr Koonin
have agreed that his last day of employment will be 30 April 2013 and he will there after be available on a
consultancy basis. The final terms of his settlement and his on going consultancy terms will be disclosed
when both have been formally concluded between Mr Koonin and the Company.
There are no other significant contingent liabilities as at 31 December 2012.
13. EVENTS SUBSEQUENT TO REPORTING DATE
- Confirmation of Makhado coal as a world class hard coking coal with good coke strength. Wood
Mackenzie who were engaged to review the coal to be produced at the Makhado Project have
confirmed that it has the potential to be a world class hard coking coal. Memorandum of Understanding
("MOU") signed appointing Vitol as the Company's marketing agent for all export thermal and coking
coal for eight years, except for Makhado product where the marketing period is five years from start of
production. The MOU excludes all current agreements and potential coal off take arrangements with
the Company's strategic equity partners.
- Agreement with Grindrod to remove CoAL's funding obligation for the Phase 4 expansion of the Matola
Terminal. Additional throughput volumes will be contracted for on a take or pay basis.
- PRC regulatory approval for HEI's $100.0 million investment in the Company and CoAL shareholder
approval of the transaction resulting in the Company receiving $80.0 million on 31 January 2013 from
HEI and the issuance of 247,417,599 CoAL shares.
- Heavy rainfall and resultant flooding resulted in the stoppage of operations at the Vele Colliery. Limited
operations re commenced with production returning to normal levels during the first week of February
2013.
- The derailment of 10 wagons on the Maputo rail corridor on 18 February 2013 led to the damage of a
rail bridge resulting in the suspension of all traffic between Komatipoort and Maputo, until
approximately the end of March 2013.Transnet Freight Rail has been unsuccessful in establishing
alternative routes to the Port of Matola. Accordingly Vele, Mooiplaats and Woestalleen collieries issued
force majeure notices to their customers, contractors and affected stakeholders. The Company has
implemented measures at all operations to mitigate the commercial and operational impact of the
force majeure. Although Vele operations were temporarily suspended due to existing stockpiles and
limited remaining capacity at both the plant and siding, production at Mooiplaats and Woestalleen will
continue until the stockpile capacity has been fully utilized.
14. SEGMENTAL INFORMATION
The Group has three reportable segments: Exploration, Development and Mining.
The Exploration segment is involved in the search for resources suitable for commercial exploitation, and
the determination of the technical feasibility and commercial viability of resources. As at 31 December,
2012, projects within this reportable segment include two exploration and development stage coking and
thermal coal complexes, namely the Chapudi Complex (which comprises the Chapudi project, the Chapudi
West project and the Wildebeesthoek project), and the Soutpansberg Complex (which comprises the
Voorburg project, the Mt Stuart project and the Jutland project.)
The Development segment is engaged in establishing access to and commissioning facilities to extract,
treat and transport production from the mineral reserve, and other preparations for commercial
production. As at 31 December 2012, projects included within this reportable segment include two coking
coal projects, namely the Vele Colliery and the Makhado Complex (comprising the Makhado project, the
Makhado Extension project and the Generaal project), both in the early operational and development
stage, respectively. The Mining segment is involved in day to day activities of obtaining a saleable product
from the mineral reserve on a commercial scale.
As of 31 December 2012 the Group had two operational thermal collieries included in this segment, namely
the Mooiplaats Colliery and the Woestalleen complex.
The Group evaluates performance on the basis of segment profitability, which represents net operating
(loss) / profit earned by each reportable segment before impairment of financial assets, impairment of
mining assets, depreciation, amortisation, foreign exchange gains, and impairment of assets held for sale.
They are managed separately because, amongst other things, each reportable segment has substantially
different risks.
The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties, ie
at current market prices.
The Group's reportable segments focus on the stage of project development and the product offerings of
coal mines in production.
For the six months ended Exploration Development Mining Total
31 December 2012 $'000 $'000 $'000 $'000
Revenues from external customers(1) 87,255 87,255
Inter segment revenues 27,316 27,316
Revenue 114,571 114,571
Segment loss 521 761 74,732 76,014
Items included within the Group's
measure of segment profitability
- Depreciation and amortisation 6 35 18,731 18,772
- Impairment 50,000 50,000
- Finance cost (net) 844 844
1. Revenues represent sale of
product
Segment assets 169,727 146,588 106,715 423,030
Items included within the Group's
measure of segment assets
- Additions to non current assets 4,219 15,288 1,984 21,491
Segment liabilities 6,339 8,420 87,831 102,590
For the six months ended Exploration Development Mining Total
31 December 2011 $'000 $'000 $'000 $'000
Revenues from external customers 125,887 125,887
Inter segment revenues 34,007 34,007
Revenue 159,894 159,894
Segment loss 8 352 20,216 20,576
Items included within the Group's
measure of segment profitability
- Depreciation and amortisation 21 27,293 27,314
- Impairment
1. Revenues represent sale of
product
Segment assets 65,950 117,247 217,790 400,987
Items included within the Group's
measure of segment assets
- Additions to non current assets 5,434 7,018 2,096 14,548
Segment liabilities 4,582 8,501 110,510 123,593
Reconciliations of the total segment amounts to respective items included in the consolidated financial statements are
as follows:
Six months ended Six months ended
31 Dec 2012 31 Dec 2011
$'000 $'000
Total loss for reportable segments 76,014 20,576
Reconciling items:
Unallocated corporate (income) / costs 23,194 20,459
Depreciation 458 641
Impairment of assets held for sale 1,926
Foreign exchange loss 19,855 34,922
Loss before taxation 119,521 78,524
Total segment assets 423,030 400,987
Reconciling items:
Unallocated property, plant and equipment 19,156 21,877
Assets classified as held for sale 19,265
Intangible assets 18,845 19,376
Other financial assets 6,331 13,024
Other receivables 4,154 12,800
Unallocated current assets 28,228 84,694
Total assets 499,744 572,023
Total segment liabilities 102,590 123,593
Reconciling items:
Liabilities held for sale 993
Unallocated liabilities 60,104 4,544
Total liabilities 162,694 129,130
DIRECTORS' DECLARATION
The Directors declare that in the directors' opinion,
1. The condensed financial statements and notes of the consolidated entity are in accordance
with the following:
a. complying with accounting standards and the Corporations Act 2001; and
b. giving a true and fair view of the consolidated entity's financial position as at
31 December 2012 and of its performance for the half-year ended on that
date.
2. There are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors, made pursuant to
section 303(5) of the Corporations Act 2001.
On behalf of the Directors
John Wallington
Director
Dated at Johannesburg, South Africa, thiS 14th day of March 2013.
AUDITORS INDEPENDENCE DECLARATION AND INDEPENDENT AUDITORS REVIEW REPORT
These documents can be seen on the financials published on the Companys website at www.coalofafrica.co.za
Date: 15/03/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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