Wrap Text
Placement of US100m dollars
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 1 October 2012
US$100 million placement with the Beijing Haohua Energy Resource Group to form a
strategic partnership to facilitate the development of Coal of Africa Limited’s
operations and development projects
Coal of Africa Limited (“CoAL”) is pleased to announced that it has entered in to a binding
offer letter from Haohua Energy International (Hong Kong) Co. Limited (“HEI”), a wholly
owned subsidiary of Beijing Haohua Energy Resource Co. Limited (“BHE”), to subscribe for
US$100 million of CoAL shares at a price of £0.25 per share, subject to, inter alia, the terms
and conditions set out below (“Placement”).
The Placement has been structured in two tranches:
- An initial US$20 million tranche (“Initial Placement”), which, given that HEI is a
Chinese State-owned Entity, is conditional upon HEI receiving approval from the
Australian Foreign Investment Review Board (“FIRB”), which would provide HEI with an
interest in CoAL of between 4.8% to 5.2% in the issued share capital of CoAL; and
- A second subscription of US$80 million (“Conditional Placement”) conditional upon
receiving the requisite approvals, including those required from the relevant authorities in
the People’s Republic of China (“PRC”).
Profile of BHE and formation of a long term strategic partnership
BHE is a coal producer, based in Beijing, and engaged in mining, washing, export and sales
of coal products and the largest exporter of anthracite coal from China. BHE is listed on the
Shanghai Stock Exchange and one of the constituent stocks of the SSE 130 and the SSE
Composite Index. BHE was founded in 2002 by Jingmei Group, the only Chinese coal
producer under the authorisation of the Beijing Municipal Government; Minmetals, a leading
diversified mining company; Shougang, one of the largest steel producers in China; China
Coal, one of China’s top 3 coal producers; and CCRI, the only coal research institute
servicing the coal industry in China.
LIB01/C1AH/2667204.1 Hogan Lovells
The Placement would be the first investment by HEI outside of the PRC and serves to
facilitate the formation of a long term and mutually beneficial strategic partnership between
CoAL and HEI, with a vision to unlock the intrinsic value inherent in CoAL’s operations and
projects.
Commenting on the Placement, John Wallington, CEO of CoAL, said: "The placement would
expedite the development of CoAL’s projects and lead to the formation of a strategic
partnership and provide direct exposure to the world’s largest coking coal market. The
exchange of financial, technical and operational expertise will facilitate the growth and
development of CoAL and the coking coal industry in South Africa."
In this context, and subject to the implementation of the Initial and Conditional Placement,
CoAL has undertaken to facilitate the appointment of two HEI nominees to the board of
directors of CoAL and engage in discussions to formalize the strategic partnership. The
engagement would include consultation on commercial, technical, financial and operational
issues pursuant to which CoAL will be able to draw on HEI’s technical expertise.
Furthermore, HEI has undertaken to use its best endeavours to arrange further financing, on
the most favourable terms available, in the development of the CoAL’s substantial project
pipeline.
David Brown, Chairman of CoAL, said: “I am pleased to have had the privilege of seeking to
formalise a partnership with HEI in pursuit of a company-transforming transaction through
capital investment. The introduction of HEI as a cornerstone shareholder will position CoAL
to unlock its intrinsic value.”
Initial Placement
The Initial Placement will be for a consideration of US$20 million at a price of £0.25 per
CoAL share.
The Initial Placement is only subject to FIRB approval as HEI have advised CoAL that PRC
approval is not required. Accordingly, should HEI obtain FIRB approval, HEI will subscribe
for the Initial Placement on the earlier of 31 January 2013 and the date on which HEI
receives all approvals from the applicable PRC provincial regulatory authorities required by
HEI for the Conditional Placement.
To demonstrate and secure its commitment to subscribe for the Initial Placement, HEI has
agreed to provide CoAL with a US$20 million deposit to be applied to the settlement of the
Initial Placement by 31 October 2012. The deposit will be held in an escrow account until
HEI receives FIRB approval for the Initial Placement and will only be repayable to HEI if
FIRB approval is not obtained.
If HEI has not obtained the required PRC provisional regulatory approvals for the Conditional
Placement by 31 January 2013, the Initial Placement will still proceed but will be adjusted so
that HEI pays a subscription price of £0.35 per CoAL share.
Conditional Placement
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In addition to the Initial Placement, HEI has agreed to subscribe for an additional US$80
million of CoAL shares at a price of £0.25 per share, subject to the fulfilment of the following
conditions:
- all approvals from the applicable PRC provincial regulatory authorities required by HEI;
- CoAL shareholders approving the Conditional Placement as required by the ASX Listing
Rules and by section 611, item 7 of the Corporations Act; and
- CoAL and HEI obtaining all other necessary regulatory and statutory approvals and
consents.
If for any reason these conditions cannot be fulfilled before 31 January 2013, CoAL and HEI
have agreed to cooperate to consider other options for HEI to provide the requisite funding
support to CoAL.
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
Jos Simson/Emily Fenton Financial PR (United Tavistock +44 20 7920 3150
Kingdom)
Chris Sim/Neil Elliot Nominated Adviser Investec Bank plc +44 20 7597 5970
Robert Smith JSE Sponsor Investec Bank Limited +27 11 286 7000
Charmane Russell/Jane Financial PR (South Africa) Russell & Associates +27 11 880 3924
Kamau or
+27 82 372 5816
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 draft 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 Soutpansberg 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.
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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.
The updated resource estimates are presented in detail in the "Independent Technical Statement for Greater
Soutpansberg Projects for Coal of Africa Limited, 31st May 2012" ("Technical Statement") prepared by Venmyn
Rand (Pty) Ltd ("Venmyn"), which is available on the Coal of Africa website, www.coalofafrica.com.
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