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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")
DEBT AND EQUITY FINANCING PACKAGE ARRANGED
FURTHER STEPS TOWARDS FINANCING OF THE MAKHADO PROJECT
18 July 2012.
Coal of Africa Limited ("CoAL" or the "Company") is pleased to announce that it has entered
into a financing package with Investec Bank Limited ("Investec"), pursuant to which Investec
will make approximately US$58.7 million available to CoAL through a combination of debt
and equity funding. Furthermore, CoAL has the right to require Investec to subscribe for up
to a maximum of 81,061,507 CoAL shares in tranches over a 12 month period, subject to
certain conditions described below.
CoAL Chief Executive John Wallington commented, 'This debt and equity financing package
signals good support for our long term growth strategy. The funds will be used for
expenditure on key items for the Makhado Project, additional funding for the ramp-up of
production at the Vele Colliery and for general working capital purposes. Progress continues
to be made at Vele with the coking coal test work and the finalisation of the Phase 1 capital
project to enable the achievement of the initial target of 1 million tonnes per annum. The
public participation process with the communities at Makhado has made significant
progress since the formation of a community representative forum that is engaging
positively with the Company.'
Equity funding arrangements
Under the equity funding arrangement, Investec has today subscribed for a total of
19,148,408 million CoAL shares. Investec will subscribe for 16,850,599 shares at a
subscription price of 29.21 pence per share and 2,297,809 shares at 43.70 cents (Australian)
per share, 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 17 July 2012. The
aggregate consideration for these shares is approximately US$8.7 million.
The Company will also have a right, for a 12 month period, to require Investec to subscribe
for additional CoAL shares in tranches, in each case at a time and in an amount to be agreed
between CoAL and Investec, at a 5% discount to the closing price of a CoAL share on the
trading day prior to the issue of a subscription notice by Investec. The maximum number of
shares for which Investec can be required to subscribe under this arrangement is 81,061,507
CoAL shares (including the shares already subscribed for), being the maximum number of
shares that the Company is permitted to issue under its existing 15% authority to allot
shares for cash under ASX Listing Rule 7.1.
The Company intends to utilise the funds made available through the equity funding for
continuing pre-mining right development expenditure on key items for the Makhado
Project, additional funding for the ramp-up of production at the Vele Colliery and otherwise
for general working capital purposes.
Debt funding arrangements
CoAL and Investec have also entered into a credit approved term sheet ("Loan Term Sheet")
to provide the Company with a US$50 million two-year loan facility (the "Loan"). The Loan is
primarily intended to provide the Company with the ability to replace its existing short term
US$40 million 364 day revolving finance facility with JP Morgan Chase to a longer tenor of
two years and on more favourable terms.
Under the Loan Term Sheet Investec will provide a facility of US$50 million which may, at
CoAL's discretion, be settled in cash or shares over a two year term. The availability of the
loan is subject to a number of conditions precedent, including the parties having entered
into formal loan financing and security documents.
Other arrangements
In connection with the equity funding arrangements, CoAL and Investec have entered into a
derivative agreement pursuant to which the parties agree to pay each other on one or more
settlement dates determined by Investec (relative to any shares issued under the
Subscription Agreement) an amount referenced to any movements in the CoAL share price
between the date of issue of the relevant shares under the Subscription Agreement and the
relevant settlement date (with payment due to CoAL if there is an upwards movement and
with payment due to Investec if there is a downwards movement in the share price). The
derivative agreement has a maximum term of 12 months from the date the relevant shares
are issued. During this period, Investec will also be entitled to close out the derivative
agreement with CoAL for the balance of any CoAL shares that Investec holds at the closing
price of those CoAL shares on the trading day prior to the issue of a subscription notice for
those shares, together with any interest accrued thereon.
Further funding for Makhado Project
CoAL is also continuing to consider various long term debt and equity financing options in
relation to the expected construction and development costs for the Makhado Project
following the granting of the mining right, and has involved three international investment
banks in this process. This funding would be in addition to the potential investment in and
co-funding of the Makhado Project by Exxaro pursuant to Exxaro's option to acquire an
interest in up to 30% of the project.
AUTHORISED BY:
John Wallington
Chief Executive Officer
For more information contact:
John Wallington
Chief Executive Officer
Coal of Africa
+27 11 575 4363
Wayne Koonin
Financial Director
Coal of Africa
+27 11 575 4363
Shannon Coates
Company Secretary
Coal of Africa
+61 89 322 6776
Sakhile Ndlovu
Investor Relations
Coal of Africa
+27 11 575 6858
Charmane Russell/Jane Kamau
Financial PR (South Africa)
Russell & Associates
+27 11 880 3924
+27 82 372 5816
Jos Simson/Emily Fenton
Financial PR (United Kingdom)
Tavistock
+44 20 7920 3150
Chris Sim/Jeremy Ellis/Neil Elliot
Nominated Adviser
Investec Bank plc
+44 20 7071 4300
Ruben Govender
JSE Sponsor
J.P. Morgan Equities Limited
+27 11 507 0430
www.coalofafrica.com
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, including CoAL's Makhado Project (coking coal) and
the Mooiplaats and Woestalleen Collieries (both thermal coal).
The Mooiplaats Colliery commenced production in 2008 and is currently ramping up to
produce 1.6 Mtpa. The Woestalleen Colliery, acquired through the acquisition of NuCoal
Mining (Pty) Limited in January 2010, currently processes approximately 2.5Mtpa of saleable
coal for domestic and export markets. The Woestalleen Complex also incorporates three
beneficiation plants with a total processing capacity of 350,000 run-of-mine (ROM) feed
tonnes per month.
CoAL's Vele Colliery commenced production in Q1 2012. During the initial phase, the
operation is targeting 2.7 Mtpa ROM production to produce 1.0Mtpa of saleable coking
coal. The Makhado Project, CoAL's flagship project in the Soutpansberg coalfield, is well into
the feasibility stage, with a Definitive Feasibility Study having been reviewed by the CoAL
Board in March 2012. An application for a New Order Mining Right for the Makhado Project
was submitted in January 2011.
In May 2012, CoAL acquired the Chapudi coal project and several other coal exploration
properties in the Soutpansberg coal basin in South Africa, subsequently renamed the
Greater Soutspansberg Project, from the previous owners, including Rio Tinto. The Greater
Soutpansberg Project is a consolidation of nine potential coking and thermal coal assets
grouped into three proximate regions, namely Mopane, Makhado and Chapudi. The
acquisition of these assets strengthens Coal of Africa's position as one of the most
substantial holders of prospecting and mining rights for coking coal in South Africa's
Soutpansberg coalfield.
Date: 18/07/2012 07:30:00 Supplied by www.sharenet.co.za
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