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PET - Petmin Limited - Update: approval for construction of R120 million plant

Release Date: 22/07/2010 09:09
Code(s): PET
Wrap Text

PET - Petmin Limited - Update: approval for construction of R120 million plant at Somkhele to double current capacity to 1.1 million sales tonnes per year PETMIN LIMITED Incorporated in the Republic of South Africa Registration Number 1972/001062/06 Share Code JSE: PET & ISIN: ZAE000076014 Share Code AIM: PTMN ("Petmin" or "the Company") UPDATE: APPROVAL FOR CONSTRUCTION OF R120 MILLION PLANT AT SOMKHELE TO DOUBLE CURRENT CAPACITY TO 1.1 MILLION SALES TONNES PER YEAR 22 July 2010: JSE- and AIM-listed multi-commodity company Petmin Limited announced today that the Board has approved capital expenditure of R120 million for the construction of the second coal processing plant at its Somkhele mine in Kwa Zulu-Natal, South Africa. The construction of a second plant will double current production capacity to approximately 1.1 million sales tonnes a year. It is anticipated that the plant will be funded with a combination of debt (not more than 65%) and the Company`s own cash resources. Petmin`s cash resources are in excess of R230 million and the company`s debt gearing ratio is less than 10%. The plant will be commissioned by 31 December 2011. Somkhele, which lies 85 kilometres to the north-east of Richards Bay, is the second largest producer of high quality metallurgical anthracite in South Africa. The additional capacity of approximately 535,000 saleable tonnes per annum will position Somkhele as the largest producer of metallurgical anthracite in the country. Ian Cockerill, Petmin`s Executive Chairman from 1 July 2010, said, "This significant organic expansion at Somkhele is an exciting step in Petmin`s growth strategy reflecting both our confidence in this operation`s ability to deliver increased production and our analysis of the global market ". Bradley Doig, the Petmin COO said that "Our anthracite is high quality and is a cost effective alternative to metallurgical coke in steel and ferro alloy production. Our current assessment of the market is that global steel market will continue to grow in the medium to long term and that there will be continued substitution of anthracite for other carbon sources. Somkhele is currently mining on approximately 1 400 hectares and exploring on a further 23 000 hectares, with SAMREC-compliant reserves and resources of 51.2 million tonnes. Following an accelerated exploration drilling programme completed in June 2009, additional resources of 24 million tonnes were delineated in the Luhlanga, KwaQubuka and Emalehlene coal deposits which are in close proximity to the current processing plant. The mine, which supplies both local and overseas markets, has a dedicated export facility of 600,000 tonnes per annum at the Richards Bay Dry Bulk Terminal and is well positioned to grow its export market. Petmin acquired Somkhele in November 2005 and the mine was commissioned in June 2007. Its other assets are the SamQuarz silica mine and a 25% interest in the Veremo pig-iron project, both in Mpumalanga Province. Johannesburg 22 July 2010 Enquiries: Petmin Bradley Doig (COO) +27 824 597 818 Nominated Advisor (AIM) Numis Securities Limited John Harrison +44 207 260 1000 Sponsor and Corporate Advisor (JSE) River Group Andrew Lianos +27 834 408 365 Date: 22/07/2010 09:09:02 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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