Wrap Text
Full Year Results for the Period Ended 30 June 2014
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
30 September 2014
Full Year Results for the Period Ended 30 June 2014
Coal of Africa Limited (“CoAL” or the “Company”) is pleased to provide a copy of its Annual Financial
Statements for the year ended 30 June 2014 which are available on the Company’s website,
www.coalofafrica.com.
Highlights:
- No Fatalities (FY2013: one) and one lost time injury recorded during the year (FY2013: 14).
- Appointment of Sedgman as engineer for the front-end engineering and design (‘FEED’) for the Vele
Colliery plant modification project.
- Signature of a Memorandum of Agreement with seven communities located in the proximity of the
Makhado Project, ensuring a broad based Black Economic Empowerment (‘BEE’) structure is in place. The
Company continued its interaction with potential funders of this BEE structure which will facilitate the
finalisation of their acquisition of a 20% interest in the Makhado project.
- The Makhado Project received Environmental Authorisation in terms of National Environmental
Management Act (‘NEMA’) and Environmental Impact Assessment Regulations from the Limpopo
Department of Economic Development, Environment and Tourism (‘LEDET’).
- Repayment of the remaining $12.5 million of the Deutsche Bank facility as well as the Investec derivative
facility during the year.
- A ZAR210 million (approximately $21.4 million) 18 month credit facility secured from Investec Bank
Limited. Drawdown of the first ZAR107.5 million ($10.2 million) of the Investec facility completed of which
ZAR40 million ($3.8 million) was repaid in Q2 CY2014.
- Settlement of the business interruption insurance claim relating to the February 2013 train derailment on
the Maputo corridor and receipt of ZAR14.0 million ($1.3 million) excluding VAT).
Chief Executive Officer, David Brown commented:
“The last financial year has been one of great progress for the Company in resolving many of the legacy
issues that have plagued its ability to create value for the last few years. The result of the efforts is that we
believe that CoAL is positioned to begin the process of successfully exploiting its significant resource base.
Overview
The 2014 financial year marks the conclusion of the turnaround strategy that was initiated in CY2013. Cost
cutting processes resulted in the placement of the Mooiplaats Colliery on care and maintenance, the reduction
of corporate staff head count and production at Vele was suspended in anticipation of the planned plant
modification On 19 September 2014 the Company signed a Sale and Purchase Agreement (“SPA”) for the
disposal of the Mooiplaats colliery for a gross consideration of ZAR250 million ($23.47 million) in cash. This
will finalise the sales of the identified non-core assets. During the year the S11 approval was granted by the
Department of Mineral Resources (“DMR”) completing the final condition for the sale of the Woestalleen
Complex and the Opgoedenhoop mining right. A ZAR5million ($0.5 million) option fee has been received for
the acquisition of the Holfotein project for an all-inclusive amount of ZAR50 million ($5.2million) and the
Company converted its shareholding in the ASX listed Lemur Resources Limited to AIM listed Bushveld
Minerals Limited (“Bushveld”) shares. The Bushveld shares have been partially sold and the balance will be
sold depending on market conditions.
On 27 August 2014 the Company reached an agreement with Grindrod Corridor Management Proprietary
Limited and Terminal de Carvão da Matola Limitada (‘TCM‘), both subsidiaries of Grindrod Limited
(‘Grindrod‘), which will result in a $10 million payment. The payment will settle the current liabilities recorded
to date as well as cover all future take or pay obligations until 31 December 2016. The Company will be able
to export coal during the settlement period with no take or pay obligations.
On 25 September 2014 the shareholders voted in favour of an equity placement of up to $64.9 million
(£38.225 million). The Company have satisfied all the conditions to Stage 1 of the placement for 251,000,000
ordinary shares of approximately $23.4 million ($£13.805 million) save for regulatory approvals within the
People's Republic of China which are expected in the near future.
Operational Review
Mooiplaats Colliery – Ermelo Coalfield (74% owned)
- The Mooiplaats thermal coal colliery (“Mooiplaats Colliery”) was placed on care and maintenance
during the September 2013 quarter and recorded no lost time injuries (“LTIs”) during the period
(FY2013: ten LTIs).
- As at 30 June 2014 the colliery was considered to be non-core and recorded as an ”operation held for
sale”
- Subsequent to year end the Company announced the signature of a SPA for the Mooiplaats Colliery.
The SPA is subject to the confirmation of funding and the purchaser expects to finalise this condition
by the end of October 2014
Vele Colliery – Limpopo (Tuli) Coalfield (100% owned)
- The Vele coking and thermal coal colliery (“Vele Colliery”) recorded no LTIs during the quarter
(FY2013: one LTIs).
- During the period the Snowden Group (“Snowden”) commenced with a Technical Review of the Vele
Colliery plant modification and Sedgman South Africa (“Sedgman”) continued with the FEED process
for the plant modification project.
- The construction of the plant modification is expected to commence in Q3 CY2015 and be completed
by the end of CY2015 with the production ramp-up phase complete in early CY2016. The Company
intends to fund the plant modification with the proceeds from the approved equity raise.
- During the year the Company received stakeholder input for the application to amend the
Environmental Authorisation in terms of the NEMA relating to the Vele plant modification project. No
material issues were raised and the Company is confident that the record of decision from the
Department of Environmental Affairs will be received during Q4 CY2014. Extensive work on the
application to amend the colliery’s Integrated Water Use Licence (“IWUL”) to include the plant
modifications was undertaken during the period and this application was submitted during September
2014. In addition the Company decided to submit a renewal application with the amendments as the
IWUL expires in March 2016. The Company is following a prudent approach and the current IWUL
remains valid. CoAL expects that the IWUL approval will result in construction of the plant
modification to start in Q3 of CY 2015
- Discussions with potential customers for the Vele Colliery coal continued during the quarter and the
Company expects to convert these into formal off-take agreements in CY2015.
Makhado Coking Coal Project – Soutpansberg Coalfield (100% owned)
- The Makhado coking coal project (“Makhado Project”) recorded no LTIs (FY2014: no LTIs) during the
financial year.
As required under South African mining legislation, a minimum 26% Black Economic Empowerment (“BEE”)
shareholding is required for mining and exploration projects. The Company signed a Memorandum of
Agreement during the March 2014 quarter to enable a BEE consortium comprising seven local communities to
acquire an interest ensuring that the Makhado Project has the requisite corporate structure for the granting of
the New Order Mining Right (“NOMR”). Discussions continued with potential funders to facilitate the BEE
consortium’s acquisition of its interest and the Company anticipates that these will be finalised during Q4
CY2014, expediting the granting of the NOMR.
Greater Soutpansberg Project (MbeuYashu) (74% owned)
- The MbeuYashu Project recorded no LTIs (FY201: no LTIs) during the period.
- During the quarter the Company finalised the public participation programmes in relation to the
Environmental Impact Assessment phase for the Generaal, Chapudi and Mopane projects, all forming
the Greater Soutpansberg Project.
Future developments
The Company has finalised additional core drilling and core testing in order to ascertain the coal quality at the
Vele colliery. This data has been utilised in a financial model which supports the investment case for a plant to
produce semi-soft coking coal as well as thermal coal. The board approved the technical plan and has
commenced on the engineering design for the plant modification required at Vele, which will allow the
commencement of a 6 month construction in Q3 CY2015 with a 3 month ramp-up to full production, subject to
regulatory approvals. The planned plant modification will be funded from the proceeds of the proposed equity
raise, as announced on 26 August 2014.
The Makhado project Definitive Feasibility Study (‘DFS’) completed during the previous financial year
indicates that the project has 344.8 million mineable tonnes in situ and a 16 year life of mine. The opencast
project is expected to produce 12.6 million tonnes per annum (‘Mtpa’) of ROM coal yielding 2.3 Mtpa of hard
coking coal and 3.2 Mtpa of thermal coal for the domestic or export markets. The project is expected to cost
ZAR3.96 billion ($406 million) (including contingency) to build. The project’s Internal Rate of Return (‘IRR’) of
30.1% and Net Present Value (‘NPV’) of ZAR6.79 billion ($697 million) were calculated using independently
forecast average hard coking coal prices over the life of the mine(as at June 2013).
The exploration and development of the CoAL prospects in the Soutpansberg coalfield is the catalyst for the
long-term growth of the Company. The Department of Mineral Resources has accepted the Company’s New
Order Mining Right applications for the Mopane, Generaal and Chapudi projects.
Financial review
- $3.3 million (FY2013: $145.4 million) in revenue generated by the Mooiplaats colliery for the year with the
significant reduction in revenue as a result of the operation being put on care and maintenance in October
2013.
- Non-cash charges of $54.2 million (FY2013: $106.4 million) including:
- impairment of Mooiplaats of $14.9 million (FY2012: $48.5 million);
- depreciation and amortisation of $2.2 million (FY2013: $28.6 million);
- unrealised foreign exchange losses of $36.4 million (FY2013: $28.6 million) as a result of the South
African rand weakening against the United States dollar; and
- share based payment expense of $0.7 million (FY2013: $0.7 million).
- Envicoal (Pty) Ltd had previously launched arbitration proceedings against NuCoal Mining (Pty) Ltd in
which they originally sought to claim damages to the value of ZAR188.1 million ($17.8 million). A ruling
on this matter was received on 12 September 2014 with an award for Envicoal. The Company is
reviewing the findings and pending the finalisation of all related processes, has therefore provided for
the full amount payable of $2.2 million as at 30 June 2014
Total unrestricted cash balances at year-end, including cash held by operations available for sale was $2.1
million (FY2013: $29.9 million). The Directors believe that, provided the announced equity raise ($64.9 million)
and sale of Mooiplaats Colliery ($23.47 million) are successfully concluded, the Company will have sufficient
funds for the Company's expected working capital requirements for at least the next 18 months. Shareholders’
attention is also drawn to the ‘Going Concern’ disclosure in the Notes to the Financial Statements.
AU: Coal of Africa Limited, Suite 8, 7 The Esplanade, Mount Pleasant, Perth WA 6153, Australia, Tel: +61 8 9316 9100, Fax: +61 8 9316 5475
ZA: South Block, Summercon Office Park, Cnr Rockery Lane and Sunset Avenue, Lonehill, 2191, Tel: +27 10 003 8000 Fax: +27 11 388 8333 Email: adminza@coalofafrica.com
Bernard R. Pryor – Chairman, David H. Brown – Chief Executive Officer , Michael G. Meeser – Chief Financial Officer
Non-executive directors: Peter G. Cordin, Khomotso B. Mosehla , David J. K. Murray, Rudolph H. Torlage
For more information contact:
David Brown Chief Executive Officer Coal of Africa +27 10 003 8000
Michael Meeser Chief Financial Officer Coal of Africa +27 10 003 8000
Celeste Harris Investor Relations Coal of Africa +27 10 003 8000
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/George Price/Jeremy Ellis Nominated Adviser Investec Bank plc +44 20 7597 5970
Charmane Russell/Jane Kamau 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 /MbeuYashu, including CoAL’s Makhado Project
(coking and thermal coal).
Date: 30/09/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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