Wrap Text
Report for the quarter ended 31 December 2016
progress in identifying cash generating asset
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")
REPORT FOR THE QUARTER ENDED 31 DECEMBER 2016
PROGRESS IN IDENTIFYING CASH GENERATING ASSET
Coal of Africa Limited (“CoAL” or “the Company”) which operates in South Africa, together with its
subsidiaries, hereby provides its update for the quarter ended 31 December 2016. All figures are denominated
in United States dollars unless otherwise stated. A copy of this report is available on the Company's website,
www.coalofafrica.com.
Salient operational features
- No lost-time injuries (“LTIs”) recorded during the quarter (FY2017 Q1: nil).
- The Integrated Water Use Licence (“IWUL”) for the Makhado Project remains suspended following an
appeal to the Department of Water and Sanitation (“DWS”) submitted by the Vhembe Mineral Resources
Forum. Discussions continue with the Minister of Water and Sanitation.
- Appeal against the Environmental Authorisation (“EA”) amendment at the Makhado Project has been
dismissed by the South African Minister of the Department of Environmental Affairs.
- Continued progress in the identification of possible cash generating assets.
- The EA for the approval of the stream diversion at Vele Colliery has been awarded by the South African
Department of Mineral Resources (“DMR”).
Corporate and financial features
- Available cash at period end was US$7.36 million and restricted cash of US$0.3million.
QUARTERLY COMMENTARY
The Makhado Project recorded no LTIs (FY2017 Q1: nil) during the quarter.
Makhado’s 26-month construction phase is expected to begin as soon as all regulatory approvals are in place
(expected during CY2017). This delayed start up reflects the complex environment in which South African
mining companies operate. CoAL remains committed to ensuring that the requisite processes are completed
as efficiently as possible. Post construction, a further four month ramp-up phase will result in the production of
5.5 million tonnes per annum (“Mtpa”) of saleable product.
During FY2016 Q2 the Company was granted a 20-year IWUL for the Makhado Project. Following an appeal
to the DWS submitted by the Vhembe Mineral Resources Forum and other parties, the IWUL was
automatically suspended under Section 148 (2) (b) of the South African National Water Act No 36 of 1998.
Representation has been made to the Minister of Water and Sanitation and the Water Tribunal to progress the
final conclusion of the appeal.
The interim court interdict to halt any mining or construction activity issued against CoAL in respect of
the Makhado Project during Q2 FY2014 remains in place. Subsequent to this, the EA for the Makhado
Project was transferred from CoAL to Baobab Mining and Exploration (Pty) Ltd, the operating entity for the
Makhado Project in July 2016 by the DMR and the Limpopo Department of Economic Development,
Environment and Tourism (LEDET). The validity period for the commencement of activities was also further
extended for an additional five years. This authorisation is fully executable and will facilitate the
commencement of the Makhado Project upon resolution of the IWUL.
CoAL has successfully launched the Makhado Centre of Learning which aims to develop skills within
communities to enable access to opportunities offered within the Makhado Project
CoAL remains committed to the sustainable development of the Makhado Project, whilst recognising its
potential to drive significant socio-economic transformation. The Company continues to engage with all
stakeholders to ensure the on-going implementation of a co-existent model, seeking co-operation between
mining, agriculture and heritage land uses.
Mooiplaats Colliery – Ermelo Coalfield (74% owned)
The Mooiplaats thermal coal colliery was placed on care and maintenance during Q1 2014, and recorded no
LTIs during the period (FY2017 Q1: nil).
During the current quarter the Company continued discussions with potential purchasers and is assessing
various options regarding a transaction at the colliery. Interested parties are in various stages of the due
diligence process.
Vele Colliery – Limpopo (Tuli) Coalfield (100% owned)
The Vele coking and thermal coal colliery (“Vele Colliery”) recorded no LTIs during the quarter (FY2017 Q1:
nil).
The IWUL for the Vele Colliery has been renewed for a further 20 years and has also been amended in line
with the requirements for the Plant Modification Project (“PMP”) at the colliery.
The DMR has recently granted an EA in terms of the National Environmental Management Act (“NEMA”) (Act
107 of 1998) and the Environmental Impact Assessment Regulations (2014) for Vele Colliery for stream
diversion and associated infrastructural activities.
CoAL awaits the approval of an IWUL from the DWS which is the final approval required to complete the
regulatory approvals for the stream diversion in respect of the PMP.
Greater Soutpansberg Project (MbeuYashu) (74% owned)
The MbeuYashu Project recorded no LTIs (FY2017 Q1: nil) during the period.
No other significant matters to report.
Corporate
The Company is in the process of evaluating a number of opportunities to acquire a cash generating asset.
We continue to engage with potential funders to ensure any potential opportunity can be appropriately funded.
As noted previously any purchase of this nature does not confer any certainty and the Company will keep the
market informed in a timely manner. The Company is also aware of the current cash balances and the
requirement to fund the last legacy liability in June 2017 and is also in discussions to ensure the payment of
this liability can be funded and provide sufficient funding to move forward on the Makhado Project.
Markets
Hard coking coal prices have experienced tremendous movement over the last six months starting at US$86
in June 2016 surging to over US$300 a tonne by the end of the quarter. Post the quarter end of December
2016 the hard coking prices have settled to a more acceptable US$170 per tonne. At the end of the previous
quarter the Company expressed concerns on the sustainability of the current pricing, but are more
comfortable with the current levels of pricing. The Company is optimistic about the increase in project value
that these pricing levels contribute to the future projects.
David Brown, CEO commented: “The focus of the last quarter was on four main elements – firstly to acquire
a cash generating asset, secondly to ensure sufficient funding is available to meet all of the Company’s
obligations, thirdly to continue with obtaining all of the outstanding regulatory requirements for both Vele and
Makhado and finally the continued drive to dispose of the Mooiplaats asset. We continue to make progress
with each of these developments and look forward to updating the market in due course.”
Authorised by
David Brown
Chief Executive Officer
For more information contact:
David Brown Chief Executive Officer Coal of Africa +27 10 003 8000
De Wet Schutte Chief Financial Officer Coal of Africa +27 10 003 8000
Celeste Riekert Investor Relations Coal of Africa +27 10 003 8000
Tony Bevan Company Secretary Endeavour Corporate +61 08 9316 9100
Services
Company advisors:
Matthew Armitt/Ross Allister Nominated Adviser and Peel Hunt LLP +44 20 7418
Broker 8900
Jos Simson/Emily Fenton Financial PR (United Tavistock +44 20 7920
Kingdom) 3150
Charmane Russell/Olwen Financial PR (South Russell & Associates +27 11 880 3924
Auret Africa) 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).
Tenements held by CoAL and its Controlled Entities
Change
in
Project Name Tenement Number Location Interest quarter
Chapudi Albert 686 MS- Limpopo~ 74%
Project*
Bergwater 712 MS-- 74%
Remaining Extent and Portion 2 of Bergwater 697 74%
MS--
Blackstone Edge 705 MS 74%
Remaining Extent & Portion 1 of Bluebell 480 MS- 74%
Remaining Extent & Portion 1 of Bushy Rise 702 74%
MS--
Castle Koppies 652 MS-- 74%
Chapudi 752 MS -- 74%
Remaining Extent, Portions 1, 3 & 4 of Coniston 74%
699 MS--
Driehoek 631 MS-- 74%
Remaining Extent of Dorps-rivier 696 MS-- 74%
Enfield 512 MS (consolidation of Remaining 74%
Extent of Enfield 474 MS, Brosdoorn 682 MS &
Remaining Extent of Grootvlei 684 MS)--
Remaining Extent and Portion 1 of 74%
Grootboomen 476 MS- 74%
Grootvlei 684 MS-- 74%
Kalkbult 709 MS 74%
Remaining Extent, Remaining Extent of Portion 2, 74%
Remaining Extent of Portion 3, Portions 1, 4, 5, 6,
Change
in
Project Name Tenement Number Location Interest quarter
7 & 8 of Kliprivier 692 MS-
Remaining Extent of Koodoobult 664 MS- 74%
Koschade 657 MS (Was Mapani Kop 656 MS)- 74%
Malapchani 659 MS- 74%
Mapani Ridge 660 MS- 74%
Melrose 469 MS- 74%
Middelfontein 683 MS- 74%
Mountain View 706 MS- 74%
M'tamba Vlei 654 MS 74%
Remaining Extent & Portion 1 of Pienaar 635 MS- 74%
Remaining Extent & Portion 1 of Prince's Hill 704 74%
MS-
Qualipan 655 MS- 74%
Queensdale 707 MS- 74%
Remaining Extent & Portion 1 of Ridge End 662 74%
MS-
Remaining Extent & Portion 1 of Rochdale 700 74%
MS-
Sandilands 708 MS- 74%
Portions 1 & 2 of Sandpan 687 MS-- 74%
Sandstone Edge 658 MS- 74%
Remaining Extent of Portions 2 & 3 of 74%
Sterkstroom 689 MS--
Sutherland 693 MS- 74%
Remaining Extent & Portion 1 of Varkfontein 671 74%
MS--
Remaining Extent, Portion 2, Remaining Extent of 74%
Portion 1 of Vastval 477 MS-
Vleifontein 691 MS- 74%
Ptn 3, 4, 5 & 6 of Waterpoort 695 MS-- 74%
Wildebeesthoek 661 MS- 74%
Woodlands 701 MS- 74%
Kanowna M27/41 Coolgardie^ 23.68%
West and
Kalbara M27/47 23.68%
M27/59 23.68%
M27/72,27/73 23.68%
M27/114 23.68%
M27/181 21.31%
M27/196 23.68%
M27/414,27/415 23.68%
P27/1826-1829 23.68%
P27/1830-1842 23.68%
P27/1887 23.68%
Abbotshall ML63/409,410 Norseman^ Royalty
Royalty
Kookynie ML40/061 Leonora^ Royalty
Royalty
Change
in
Project Name Tenement Number Location Interest quarter
ML40/135,136 Royalty
Holfontein Remaining extent, Remaining Extent of portions Mpumalanga~ 100%
1, 5 and 11 and portions 4, 6, 9, 10, 12 and 13 of
the farm Holfontein 138 IS
Makhado Fripp 645 MS Limpopo~ 100%#
Project
Lukin 643 MS 100%#
Mutamba 668 MS 100%#
Salaita 188 MT 100%#
Tanga 849 MS 100%#
Daru 848 MS 100%#
Windhoek 847 MS 100%#
Generaal Limpopo~ 74%
Beck 568 MS--
Project
Bekaf 650 MS- 74%
Remaining Extent & Portion 1 of Boas 642 MS- 74%
Chase 576 MS- 74%
Coen Britz 646 MS- 74%
Fanie 578 MS- 74%
Portions 1, 2 and Remaining Extent of Generaal 74%
587 MS-
Joffre 584 MS- 74%
Juliana 647 MS 74%
Kleinenberg 636 MS- 74%
Remaining Extent of Maseri Pan 520 MS- 74%
Remaining Extent and Portion 2 of Mount Stuart 100%
153 MT--
Nakab 184 MT-- 100%
Phantom 640 MS-- 74%
Riet 182 MT-- 100%
Rissik 637 MS- 100%
Schuitdrift 179 MT- 100%
Septimus 156 MT-- 100%
Solitude 111 MT- 74%
Stayt 183 MT-- 100%
Remaining Extent & Portion 1 of Terblanche 155 100%
MT--
Van Deventer 641 MS- 74%
Wildgoose 577 MS- 74%
Mopane Limpopo~ 100%
Ancaster 501 MS--
Project*
Banff 502 MS- 74%
Change
in
Project Name Tenement Number Location Interest quarter
Bierman 599 MS- 74%
Cavan 508 MS 100%
Cohen 591 MS-- 100%
Remaining Extent, Portions 1 & 2 of Delft 499 74%
MS-
Dreyer 526 MS-- 74%
Remaining Extent of Du Toit 563 MS- 74%
Faure 562 MS 74%
Remaining Extent and Portion 1 of Goosen 530 74%
MS --
Hermanus 533 MS- 74%
Jutland 536 MS-- 100%
Krige 495 MS- 74%
Mons 557 MS- 100%
Remaining Extent of Otto 560 MS (Now 74%
Honeymoon)-
Remaining Extent & Portion 1 of Pretorius 531 74%
MS-
Schalk 542 MS- 74%
Stubbs 558 MS- 100%
Ursa Minor 551 MS-- 74%
Van Heerden 519 MS-- 74%
Portions 1, 3, 4, 5, 6, 7, 8, 9, Remaining Extent of 74%
Portion 10, Portions 13, 14, 15, 16, 17, 18, 19, 20,
21, 22, 23, 24, 26, 27, 29, 30, 35, 36, 37, 38, 39,
40, 41, 44, 45, 46, 48, 49, 50, 51, 52 & 54 of Vera
815 MS
Remaining Extent of Verdun 535 MS- 74%
Voorburg 503 MS-- 100%
Mooiplaats Mpumalanga~ 74%
Colliery and Portions 1, 9,14,17,18,19,20 & Remaining Extent
prospects of Mooiplaats 290 IT
Portion 2, 3 and Remaining Extent of Klipbank 74%
295 IT
Portions 1, 2 and Remaining Extent of 74%
Adrianople296 IT
Portions 2 & 3 of Willemsdal 330 IT 74%
Portions 2, 3, 4 & Remaining Extent) of De 74%
Emigratie 327 IT
Remaining Extent and Portions 2, 5, 8,10 & 13 of 74%
Buhrmansvallei 297 IT
Klipfontein 442 IT 74%
Vele Colliery Portions of Overvlakte 125 MS (Remaining Limpopo~ 100%
and prospect Extent, 3, 4, 5, 6, 13, 14)
Bergen Op Zoom 124 MS 100%
Semple 155 MS 100%
Voorspoed 836 MS 100%
Alyth 837 MS 100%
Change
in
Project Name Tenement Number Location Interest quarter
Tshikunda Certain portions of Unsurveyed State Land known Limpopo~ 60%
as Mutale
Coal bed Limpopo~ 50%
Adelaide 91 MT
methane
Adieu 118 MT 50%
Alicedale 138 MT 50%
Armstice 120 MT 50%
Bergwater 697 MS 50%
Bergwater 712 MS 50%
Blackstone Edge 705 MS 50%
Bushy Rise 702 MS 50%
Chapudi 752 MS 50%
Charlotte 90 MT 50%
Chase 576 MS 50%
Cross 117 MT 50%
Doppie 95 MT 50%
Ettie 33 MT 50%
Fanie 578 MS 50%
Feskraal 85 MT 50%
Folorodwe 79 MT 50%
Fripp 645 MS 50%
Gray 189 MT 50%
Hettey 93 MT 50%
Jeannette 77 MT 50%
Joffre 584 MS 50%
Kalkbult 709 MS 50%
Laura 115 MT 50%
Lukin 643 MS 50%
Magazasand 123 MT 50%
Malapchani 659 MS 50%
Mountainview 706 MS 50%
Mount Stuart 153 MT 50%
Nakab 184 MT 50%
Naus 178 MT 50%
Neltox 92 MT 50%
Phantom 640 MS 50%
Prince’s Hill 704 MS 50%
Queensdale 707 MS 50%
Riet 182 MT 50%
Rochdale 700 MS 50%
Rynie 158 MT 50%
Salaita 188 MT 50%
Schuitdrift 179 MT 50%
Septimus 156 MT 50%
Stayt 183 MT 50%
Suzette 32 MT 50%
Tanga 648 MS 50%
Change
in
Project Name Tenement Number Location Interest quarter
Telema 190 MT 50%
Terblanche 155 MT 50%
Trevenna 119 MT 50%
The Duel 186 MT 50%
Truida 76 MT 50%
Van Deventer 641 MS 50%
Wendy 86 MT 50%
Wildgoose 577 MS 50%
Windhoek 649 MS 50%
Zisaan 31 MT 50%
Ziska 122 MT 50%
Portion of Unsurveyed state land 50%
* Form part of the Greater Soutpansberg Project
- Lapsed – Mining Right Application Lodged
-- Valid – Mining Right Application Lodged
~ Tenement located in the Republic of South Africa
^ Tenement located in Western Australia
# CoAL’s interest will reduce to 74% owned on completion of the Broad Based Economic
Empowerment transaction
Johannesburg
31 January 2017
Sponsor
Investec Bank Limited
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