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Sharenet Sites
Voluntary operational and market update
WESCOAL HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration number 2005/006913/06)
Share code: WSL
ISIN: ZAE000069639
(“Wescoal” or "the Group")
Voluntary Operational and Market Update
Over the past three months, the Wescoal Group has steadily maintained its progress in extremely
difficult local and international market conditions, making headway across all facets of the
operations.
Mining Operations Update
The flagship Elandspruit Colliery is now delivering its production target of 165kt Run of Mine
(“ROM”) per month on a continuous basis. Mine development is at an advanced phase in line with
the project plan and budget. Recently raised funding is being used to upgrade haulage roads and to
reduce the interaction between public road users and mine operational traffic. Additionally,
significant progress has been made with the upgrading and construction of water control systems.
Work at the Wescoal Processing Plant to implement cost-saving and debottlenecking projects is on
track to be completed before the end of the current financial year. This versatile facility is capable of
producing a range of domestic, export and Eskom grade products.
The Intibane Colliery was issued a water use license in the latter part of December 2015. This has
triggered a ramp up in site activity, in order to increase production to its steady state target of 80kt
ROM per month. Intibane produces coal which is suitable for the Eskom or low grade domestic
markets.
Progress has also been made in acquiring resources contiguous to Khanyisa Colliery. An agreement
has been reached with counterparties which has the potential to extend Khanyisa’s Life of Mine by
between three and four years. The agreement is subject to a number of conditions precedent and
approval from the Department of Mineral Resources. Mining activities at Khanyisa are also subject to
the granting of a water use license – an application was submitted to authorities in February 2015.
Cost management remains a focus. In this regard, increased production from Intibane will help drive
volume based cost dilution and recent equity injections will reduce interest costs slightly.
Wescoal continues to supply Eskom as well as other domestic and export customers. Global coal
oversupply and sentiment have had a negative impact on domestic and export price expectations.
However, the weakening exchange rate will have a positive impact on the rand price of export coal
going forward.
Trading Division Update
The trading division continues to meet expectations despite the challenging local business
environment and pressures on operating margins.
Corporate Office
Recent fund raising initiatives raised R52 million. While this was less than anticipated, it was
sufficient to initiate crucial de-risking and optimisation projects across the Wescoal Group. Proceeds
from the fund raising have also helped to alleviate pressure on the Group’s cash flow which was
used to fund the development of Elandspruit.
In line with managing Group risks more effectively, legal and human resource expertise have been
insourced through the appointment of Vikesh Dhanooklal as Group Legal Adviser and Company
Secretary and Bongani Hlope as head of Human Resources.
Wescoal Holdings Limited mines, processes, supplies, sells and distributes coal. It is listed
on the main board of the JSE and its key strategic thrust is to be a leading junior coal
miner with a sustainable resource base and a coal trading operation.
25 January 2016
Sponsor
Nedbank Corporate and Investment Banking
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