Wrap Text
Report for the quarter ended 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")
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 31 December 2012
Consolidated statement of cash flows
Year to date
Cash flows related to operating activities Current quarter (6 months)
US$'000 US$'000
1.1 Receipts from product sales and related debtors
65,122 110,145
1.2 Payments for (a) exploration & evaluation (1,967) (6,893)
(b) development (4,386) (17,993)
(c) production (48,786) (85,284)
(d) logistics (16,642) (27,921)
(e) administration (9,329) (19,435)
(f) changes in working capital (1,402) (9,847)
1.3 Dividends received - -
1.4 Interest and other items of a similar nature
received 146 338
1.5 Interest and other costs of finance paid (347) (675)
1.6 Income taxes paid - -
1.7 Other (provide details if material) - -
Net Operating Cash Flows (17,591) (57,565)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects (9,802) (9,802)
(b) equity investments - -
(c) other fixed assets (2,323) (6,678)
1.9 Proceeds from sale of: (a) prospects - -
(b) equity investments 140 140
(c) other fixed assets - -
1.10 Loans to other entities - -
1.11 Loans repaid by other entities - -
1.12 Other (provide details if material) (1,817) (2,113)
Net investing cash flows (13,802) (18,453)
1.13 Total operating and investing cash flows (carried
forward) (31,393) (76,018)
1.13 Total operating and investing cash flows (brought
forward) (31,393) (76,018)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. - 51,673
1.15 Proceeds from pending issues of shares* 19,565 19,565
1.16 Proceeds from sale of forfeited shares - -
1.17 Proceeds from borrowings - 5,000
1.18 Repayment of borrowings (365) (1,101)
1.19 Dividends paid - -
1.20 Other (provide details if material) - -
Net financing cash flows 19,200 75,137
Net increase (decrease) in cash held (12,193) (881)
1.21 Cash at beginning of quarter/year to date 30,319 19,523
1.22 Exchange rate adjustments to item 1.20 421 (95)
1.23 Cash at end of quarter 18,547 18,547
* Net proceeds from the US$20.0 million initial placement to Beijing Haohua Energy Resource Co.
Limited's wholly-owned subsidiary Haohua Energy International (Hong Kong) Company Limited.
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related
entities
US$'000
1.23 Aggregate amount of payments to the parties included in item 1.2 554
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.
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 -* 37,500
3.2 Credit standby arrangements - ** - **
*At 30 June 2012 the Company breached certain Total Equity covenants relating to the Deutsche Bank
facility resulting in the remaining US$12.5 million of the facility being unavailable.
** The US$40.0 million JP Morgan Limited facility expired on 3 November 2012 and the Company did
not renew this facility.
Estimated cash outflows for next quarter
US$'000
4.1 Exploration and evaluation 7,653
4.2 Development 10,451
4.3 Production 36,921
4.4 Logistics 20,409
4.5 Administration 3,094
Total *78,528
*estimated cash outflows only and excludes all revenue cash inflows
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 12,628 19,372
5.2 Deposits at call 5,919 10,947
5.3 Bank overdraft - -
5.4 Other (provide details) - -
Total: cash at end of quarter (item 1.22) 18,547 30,319
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 800,951,034 800,951,034
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 15,929,562 Nil Exercise price Expiry date
(description and See Note 6 See Note 6
conversion factor)
7.8 Issued during 3,500,000 Nil See Note 6 See Note 6
quarter
7.9 Exercised during Nil Nil See Note 6 See Note 6
quarter
7.10 Expired during 8,000,000 Nil
quarter
+ See chapter 19 for defined terms.
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 January 2013......................
(Company secretary)
TONY BEVAN
Print name: .........................................................
Notes
1 The quarterly report provides a basis for informing the market how the entity's
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 31 December 2012:
+ See chapter 19 for defined terms.
Number Issued Number Exercise Expiry Date Lapsed Since End
Quoted Price of quarter
818,500 - A$1.90 30 June 2014 -
5,000,000 - 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.
REPORT FOR THE QUARTER ENDED 31 DECEMBER 2012
On-going execution of strategy and balance sheet strengthened following the
US$100 million equity investment by Beijing Haohua Energy Resource Co. Limited
Coal of Africa Limited ("CoAL" or "the Company") the coal exploration, development
and mining company operating in South Africa, together with its subsidiaries, is pleased
to provide its operational report for the quarter ended 31 December 2012. A copy of this
report is available on the Company's website, www.coalofafrica.com.
Commenting today, Mr John Wallington, Chief Executive Officer of CoAL said: "Haohua Energy
International's US$100 million investment is a significant milestone for the Company and provides us with
the capital base to continue developing our coking coal projects. It is anticipated that a portion of the funds
will be used to complete the modifications to the Vele Colliery processing plant to enable the simultaneous
production of semi-soft coking and thermal middlings coal products. We expect the co-operation agreement
with Haohua Energy International to be finalised during the current quarter. This will enable us to start
collaborating with them to benefit from their extensive technical expertise and financial resources as we
develop the Greater Soutpansberg Projects, including the Makhado Project.
The South African mining sector continues to be affected by labour relations unrest and production at the
Mooiplaats Colliery was affected by strike action during the quarter. As previously communicated, the coal
deposit at the Vuna Colliery will be depleted by March 2013 and coupled with the restructuring process at
the Mooiplaats Colliery, our management is engaging closely with the key stakeholders to mitigate the
related impacts."
Key Highlights
- Improved safety statistics with three lost time injuries ("LTIs") recorded during the quarter
(FY2013 Q1: six).
- Run of mine ("ROM") coal production decreased from 1,523,335 tonnes in the previous quarter to
1,153,486 tonnes as a result of scheduled shutdown over the festive season and wage related strike
action at Mooiplaats.
- Export coal sales from the Matola Terminal ("Matola") increased by 83% to 411,292 tonnes (FY2013
Q1: 224,972 tonnes) due to improved demand, availability of rail capacity and the reduction of inventory
build-up in the previous quarter.
Financial Highlights
- Approval by the Australian Foreign Investment Review Board ("FIRB"), regulatory authorities in the
People's Republic of China ("PRC") and CoAL shareholders for the US$100.0 million direct investment
in the Company by Beijing Haohua Energy Resource Co. Limited's ("BHE") wholly-owned subsidiary
Haohua Energy International (Hong Kong) Company Limited ("HEI").
- Payments totalling US$9.6 million for the acquisition of the Chapudi Project shareholder claims from Rio
Tinto Minerals Development Limited ("RTMD") with the balance of US$4.0 million (plus $0.2 million in
interest) due on 28 February 2013.
- Disposal of the Company's US$11.2 million loan to Grindrod Trading & Shipping Limited ("Grindrod")
raising US$8.5 million, being the discounted present value over the remaining six year term.
- Available cash at period end of US$18.7 million and at the date of this report, US$100.8 million
including the proceeds from the US$80.0 million placement.
Corporate Highlights
- Appointment of Mr Tony Bevan as Company Secretary and closure of the Company's Australian and
London offices.
Post Period Highlights
- Signing of Memorandum of Understanding ("MOU") with Vitol as the Company's exclusive marketing
agent for all export thermal and coking coal for eight years, except for the Makhado product for which
the marketing period is five years from the 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 eliminate 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 US$100.0 million investment in the Company on 9 January 2013 and
CoAL shareholder approval of the transaction at the Extraordinary General Meeting ("EGM") held on
25 January 2013.
- US$80.0 million received from HEI on 31 January 2013 as part of the total transaction of $100.0 million,
in respect of which 197,934,063 CoAL shares at 25 pence (40.4175 United States cents per share) will be issued,with
admission to trading on the AIM market of the London Stock Exchange (AIM) on or around 7 February 2013.
- Total of 1,048,368,613 shares in issue following admission to trading on or around 7 February 2013.
- Following heavy rainfall which resulted in flooding in the Limpopo Province, the Company announced
on 21 January 2013 that operations at the Vele Colliery had been forced to stop. Rainfall has
subsequently ceased enabling mine management to return to site and establish access to the pit and
other mine facilities. Limited operations have re-commenced at the colliery and production is targeted
for the first week of February 2013.
QUARTERLY COMMENTARY
Operational Summary
Increased demand coupled with higher than normal levels of export quality coal inventory at the Matola
Terminal at the September 2012 quarter end, led to increased sales of 411,292 tonnes compared to the
previous quarter's 224,972 tonnes. Coal sales to the domestic market declined by 17.8% to 154,186 tonnes
(FY2013 Q1:187,499 tonnes) as a result of lower production owing to strike action at the Mooiplaats
thermal coal colliery ("Mooiplaats Colliery"). Sales of middlings coal to Eskom increased by 26.0% to
264,169 tonnes (FY2013 Q1: 208,985 tonnes) as deliveries of coal in the previous quarter were held in
abeyance pending conclusion of the new off-take agreement post quarter end.
December 2012 quarter (tonnes) Woestalleen Mooiplaats Vele Total
ROM production 845,834 113,157 194,495 1,153,486
Total coal processed 586,871 101,628 186,478 874,977
Overall yield* 73.1% 69.5% ** -
Total coal produced 593,799 70,656 53,993 718,448
Export coal 316,102 58,827 53,993 428,922
Middlings coal*** 277,697 11,829 - 289,526
Total coal sales 393,288 25,067 - 829,647
Export**** - - - 411,292
Inland 141,204 12,982 - 154,186
Eskom*** 252,084 12,085 - 264,169
September 2012 quarter (tonnes) Woestalleen Mooiplaats Vele Total
ROM production 993,632 274,943 254,760 1,523,335
Total coal processed 719,138 286,139 252,023 1,257,300
Overall yield* 70.4% 69.7% ** -
Total coal produced 682,973 199,578 72,325 954,876
Export coal 380,906 167,892 72,325 621,123
Middlings coal*** 302,067 31,686 - 333,753
Total coal sales 320,766 75,718 - 621,456
Export**** - - - 224,972
Inland 144,311 43,188 - 187,499
Eskom*** 176,455 32,530 - 208,985
* Overall yield is calculated using ROM feed
** Vele Colliery yields will be included when production reaches steady state
*** Woestalleen's total includes ROM coal sold to Eskom
**** Export sales include thermal coal sales from Woestalleen, Mooiplaats Colliery and the Vele Colliery
Woestalleen Complex Witbank Coalfield (100%)
The Woestalleen processing facility and Vuna Colliery recorded no LTIs during the quarter as compared to
(FY2013 Q1: nil LTIs) and (FY2013 Q1: one LTI) respectively.
As a result of the scheduled shutdowns during the holiday season, ROM coal produced by the Vuna
Colliery decreased by 14.9% from 993,632 tonnes in the September 2012 quarter to 845,834 tonnes in the
current period. A portion of the ROM coal mined at the colliery was delivered to Eskom and the balance
was processed to both an export grade product and a middlings product for Eskom.
December scheduled shutdowns also affected the Woestalleen complex resulting in 586,871 tonnes
(FY2013 Q1: 719,138 tonnes) of ROM coal being processed during the quarter. The 593,799 tonnes
(FY2013 Q1: 682,973) of saleable coal produced by the Vuna colliery and Woestalleen complex during the
quarter comprised:
- 316,102 tonnes (FY2013 Q1: 380,906 tonnes) of export quality coal; and
- 277,697 tonnes (FY2013 Q1: 302,067 tonnes) of middlings product and raw coal supplied to Eskom.
The Vuna colliery's coal reserve will be depleted by March 2013 from which time the supply of ROM coal to
the Woestalleen complex will cease. The Company is assessing various options for the Woestalleen
processing complex to either continue operating the processing facility, possible disposal or closure
thereof, with a further update to be issued in due course. 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.
Mooiplaats Colliery Ermelo Coalfield (100%)
Two LTIs were recorded at the Mooiplaats Colliery during the quarter (FY2013 Q1: six LTIs) and
management continues the focus on safety management at the mine.
Operations at the Mooiplaats Colliery were temporarily suspended at the end of September 2012 when the
176 NUM members, of the 368 people employed at the colliery, embarked on a protected wage related
strike. A wage agreement was reached with the National Union of Mineworkers ("NUM") on 31 October
2012 resulting in employees returning to work on 1 November 2012. Access to the colliery was limited
during the strike period resulting in the flooding of two of the underground sections delaying production
from these areas for more than a week after employees returned to work. The Company commenced a
section 189(A) process in relation to the restructuring of the Mooiplaats Colliery on 6 November 2012, and
further updates will be issued in due course.
On 3 December 2012, NUM-affiliated Mooiplaats Colliery employees 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 September/October 2012 strike, demanding that the suspensions be
lifted. All striking employees were dismissed on 6 December 2012 following a disciplinary process and were
given one week to appeal against their dismissal. The colliery's remaining 190 employees returned to work
on 7 December 2012 and operations resumed in two of the five underground sections, as well as coal
processing and administrative functions. On 11 December 2012, the Company and the NUM signed a MOU
re-instating 178 dismissed employees pending further disciplinary procedures.
The strike action at Mooiplaats during the quarter resulted in ROM production decreasing quarter on
quarter by 58.8% to 113,384 tonnes (FY2013 Q1: 274,943 tonnes) and coal processed declined from
286,139 tonnes to 101,628 tonnes. The colliery produced a total of 70,656 saleable tonnes (FY2013 Q1:
199,578 tonnes) during the quarter, comprising:
- 58,827 tonnes (FY2013 Q1: 167,892 tonnes) of export quality coal; and
- 11,829 tonnes (FY2013 Q1: 31,686 tonnes) of middlings product for Eskom.
The Company continued its discussions with Vunene Proprietary Limited to resolve the double granting
over approximately 128 hectares of the mining area which is included in the Mooiplaats Colliery and
Vunene New Order Mining Right ("NOMR"). As part of the initiative to address the long term viability of the
operation, various strategic restructuring alternatives including, but not limited to partnerships or disposal,
are being assessed.
Vele Colliery Limpopo (Tuli) Coalfield (100%)
Vele coking and thermal coal colliery ("Vele") recorded one LTI during the quarter (FY2013 Q1: nil LTIs)
and management has intensified its emphasis on health and safety. The mine reached an important
milestone, achieving 1,000 fatality-free production shifts at the beginning of December 2012.
The anticipated closure of Vele over the festive season resulted in ROM production during the quarter
decreasing by 23.7% to 194,495 tonnes (FY2013 Q1: 254,760 tonnes). A total of 186,478 tonnes (FY2013
Q1: 252,023 tonnes) of coal was processed during the quarter, producing 53,993 tonnes (FY2013 Q1:
72,325 tonnes) of saleable export quality thermal coal. During the period, Vele continued to produce an
export grade thermal coal product to offset costs while the test trials on potential metallurgical coal are
being completed.
During the December 2012 quarter the Save Mapungubwe Coalition joined the Vele Colliery Environmental
Management Committee ("EMC") as full members and formally withdrew from the MOU previously signed
with CoAL. The EMC includes representatives from relevant government departments, non-governmental
organisations, municipalities, farming communities and other stakeholders. The EMC continues to operate
effectively with the objective of sharing environmental monitoring information and strengthening
cooperation in the interest of sustainable development and the preservation and protection of the
Mapungubwe Cultural Landscape.
Capital expenditure
A plant expansion at Vele is planned to process the discard from the semi-soft coking coal product through
a second stage wash process to produce either an export grade thermal coal or an Eskom middlings. This
expansion will enable the simultaneous production of both products, increased qualities and yields through
the improvement of recoveries.
The expansion project has been divided into two phases. Phase 1 is scheduled for completion in the first
quarter of CY2013 while Phase 2 is expected to commence in CY2013 for completion in the second half of
CY2013. 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 phase 2 incudes the installation of a permanent front
end crushing facility and dual-product thermal and coking coal plant module.
Makhado Coking Coal Project Soutpansberg Coalfield (100%)
The scope of the Definitive Feasibility Study ("DFS") for the Makhado coking coal project ("Makhado
Project") was expanded and upgraded in CY2012 to include the thermal coal fraction and the underground
mining portions of the Makhado Project. During the December 2012 quarter, the DFS on the opencast
mining area, which includes both hard coking coal and a thermal coal fraction, was upgraded to provide
greater certainty on the operational plan and reducing project risk. The Company expects that the
additional work on the DFS will be completed in the first quarter CY2013 for release to shareholders in the
second quarter CY2013.
The Company has made significant progress on the regulatory requirements relating to the NOMR
Application. During the quarter, the Company continued to make progress on the acquisition of various
properties required for rail infrastructure and operations and discussions to acquire the remaining
properties for the Makhado Project are on-going. CoAL is also assessing various Black Economic
Empowerment structures that in conjunction with the regulatory requirements, will also provide a pro rata
share of funding into the project.
Water Requirements
During the December 2012 quarter, 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 key objectives of the MOA are to:
- improve the assurance of water supply to the Makhado Project and other water users;
- prevent the loss of jobs in the agricultural sector in the vicinity of the Makhado Project as a result of
water use at the mine; and
- facilitate the Makhado Project obtaining a bulk water allocation without negatively affecting the
availability of water for agricultural purposes.
Under the terms of the MOA, the Nzhelele Farmers surrendered 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 create "new water" to, at a minimum,
replenish the allocation surrendered by the farmers. The MOA also strives to establish the co-existence of
mining, local communities and agriculture maximising socio-economic development in the region.
The signing of the MOA enabled the submission in December 2012 of the Makhado Project Integrated
Water Use Licence Application. The application process includes the requirement for the Company to
respond to queries from the Department and Water Affairs and other Interested and Affected Parties, which
is underway.
Greater Soutpansberg Project
During the quarter CoAL continued compiling the exploration and technical data on the Greater
Soutpansberg Project ("GSP") incorporating the Chapudi, Mopane and Makhado Extension projects and in
March 2013 quarter, will commence preparation of NOMR Applications for these projects. The analysis of
this information has resulted in the compilation of an exploration programme comprising 57-hole large and
small diameter exploration holes, commencing in the first quarter of CY2013. The Company is currently
consulting with all stakeholders that will be affected by prospecting activities.
Strategic Partner Beijing Haohua Energy Resource Co. Limited
On 30 September 2012, BHE through its subsidiary HEI submitted a binding offer to subscribe for
US$100.0 million of equity funding at £0.25 per share with the transaction to be executed in two stages.
The initial placement of US$20.0 million was completed during the December 2012 quarter following receipt
of the Australian FIRB approval for the foreign direct investment into the Company. During the period, HEI
applied for the relevant PRC approvals to complete the conditional placement of US$80.0 million, which
was received on 9 January 2013. The CoAL shareholder approval of the placement and to waive the
requirement for a mandatory offer following HEI's interest in the Company exceeding 19.9%, was received
on 25 January 2013. The Company has subsequently received the US$80.0 million for the conditional
placement and will proceed to issue 197,934,063 shares on or around 4 February 2013 resulting in HEI owning
approximately 23.6% of CoAL's issued share capital.
Market context
Index-linked RB1 export quality thermal coal prices remain under pressure, and have declined by 16.0%
during the 12-month period from US$106 per tonne on 1 January 2012 to US$89 per tonne on
31 December 2012. During the quarter under review, prices decreased marginally to US$86 per tonne
compared to US$87 per tonne in the previous quarter.
The South African rand remained volatile during the 12-month period to 31 December 2012, trading
between ZAR7.46 and ZAR8.95 against the US dollar. During the December 2012 quarter the average
exchange rate weakened by 5.3% from ZAR8.25 in the September 2012 quarter to ZAR8.69, alleviating in
part the decline in coal prices.
Deutsche Bank US$50 million pre-export trade finance facility
In March 2010, the Company entered into a US$50.0 million pre-export trade finance facility with Deutsche
Bank A.G. (the "Facility") secured over CoAL's thermal coal assets, production and off-take agreements.
The terms of the Facility result in the balance reducing by one twelfth or US$4.2 million per month,
commencing in October 2012 and continuing until its expiry in September 2013.
At the end of the quarter, the reduced Facility balance was US$37.5 million and the first instalment of
US$4.2 million was paid during January 2013 in the ordinary course.
Disposal of the Grindrod Loan
In January 2009, the Company granted Grindrod a US$16.0 million interest free loan to fund the Phase 3
one million tonne per annum expansion at the Matola Terminal. The loan was interest free, repayable in
10 equal annual instalments of US$1.6 million commencing in January 2010. At 31 December 2012, the
outstanding loan balance was US$11.2 million.
During the quarter the Company agreed to an early settlement of the outstanding loan balance, calculated
on a discounted cash flow basis over the remaining period of 6 years, at US$8.5 million. The settlement
consisted of US$4.75 million in cash and the remaining US$3.75 million settling outstanding take-or-pay
liabilities and the balance held as a pre-payment against FY2013 Q3's expected payment obligations for
take-or-pay, loading and shipping charges.
Cash and Available Facilities
During the December 2012 quarter production, logistics and administration expenditure was funded from
operational cash flows and cash on hand.
The Company had inventory of 152,362 tonnes of export quality coal at the end of the quarter (FY2013 Q1:
327,156 tonnes), including 63,706 tonnes at the Matola Terminal (FY2013 Q1: 135,916 tonnes). Projected
exploration and development expenditure for the next quarter is expected to be funded from operating cash
flows as well as funds made available through HEI's equity subscriptions, including:
- capital expenditure for the plant upgrade and working capital at Vele;
- finalisation of the Makhado Project DFS and limited expenditure for the acquisition of surface rights,
water, power and consulting work;
- technical and exploration work on various tenements in the Chapudi, Mopane and Makhado Extension
project areas;
- operational expenditure at the thermal coal assets; and
- corporate costs including debt repayments, and for general working capital.
Appendix 5B Cash flow Statement
Cash outflow from operations for the quarter of US$17.6 million was 56% lower than the previous quarter of
US$40.0 million due to higher coal sales. The reduction of saleable coal inventories at mine and port
reduced by 53.1% to 154,835 tonnes (FY2013 Q1: 330,239 tonnes) resulting in the US$20.1 million
increase in sales quarter on quarter.
Net cash outflows from operations for the next quarter is expected to be in the order of US$15.0 million to
US$20.0 million, including a portion of costs associated with phase 1 of the Vele plant upgrade, exploration
costs for the GSP and the Tshipise gas project. Funding of repayment obligations under the Deutsche Bank
Facility of US$12.5 million for the following quarter and the last tranche of the RTMD payment of
US$4.2 million will be funded out of cash realised from the disposal of assets of a similar amount.
Cash outflow from investing activities of US$13.8 million included payments to Rio Tinto of US$9.8 million
as part of the acquisition of the Chapudi coal assets while cash inflows of US$19.2 million from financing
activities included the net proceeds from the US$20.0 million equity placement concluded with HEI.
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.
Authorised by
JOHN WALLINGTON
Chief Executive Officer
31 January 2013
For more information contact:
David Brown Chairman Coal of Africa +27 11 575 4363
John Wallington Chief Executive Officer Coal of Africa +27 11 575 4363
Sakhile Ndlovu Investor Relations Coal of Africa +27 11 575 6858
Tony Bevan Company Secretary Endeavour Corporate Services +61 08 9316 9100
Company advisors:
Jos Simson/Emily Fenton Financial PR (United Kingdom) Tavistock +44 20 7920 3150
Chris Sim/Neil Elliot 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, including CoAL's Makhado Project (coking coal) and the Mooiplaats and Woestalleen Collieries (both
thermal coal).
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