CoAL COO is fined over insider trading

THE Financial Services Board (FSB) yesterday said that it had fined Coal of Africa Limited (CoAL) chief operations officer Michiel Jakobus Bronn R350 000 for insider trading.

FSB said Bronn knew on May 15, 2015, that the Department of Mineral Resources had approved CoAL’s application to obtain new order mining rights for its Makhado project.

It said he also knew that CoAL planned to publish a Stock Exchange News Service (Sens) announcement on May 18, 2015, to inform the public about the granting of the Makhado mining rights.

The FSB said prior to the planned Sens announcement in May 2015, Bronn had bought 117 000 CoAL shares on the Johannesburg Stock Exchange at mostly 84c per share (cps).

“This was despite the fact that he had been specifically instructed by the chief executive of (CoAL) not to trade in CoAL shares until such time that the Sens announcement had been published.

“On May 18, 2015, when CoAl published the aforementioned Sens announcement the CoAL share price increased from an opening price of 91cps to a closing price of 122cps,” FSB said.

The regulator said it had found that Bronn had contravened the Financial Markets Act. It said his conduct constituted insider trading as he was aware of CoAL’s trading policy.

“The Enforcement Committee found that Bronn’s conduct in dealing with the case against him was less than frank and was often disingenuous, and therefore ordered that in addition to the administrative penalty Bronn must pay the costs incurred by the directorate in investigating his conduct and the costs associated with bringing the matter before the Enforcement Committee, including the costs of constituting the panel that heard the case against him,” it said.

The Makhado Project, which is in Limpopo, is expected to produce hard coking and thermal coal through open cast mining. Hard coking coal is used in steel making process.

Life of mine

According to CoAL, Makhado has 344.8 million mineable tons, which would be mined over the life of mine of 16 years, expected to be mined at an average rate of 12.6 million tons a year.

CoAL on Tuesday said the front-end engineering design for the project had been completed. The project has a capital expenditure requirement of $280 million (R3.68 billion). CoAL said construction was expected to commence next year.

The company’s shares on the JSE closed 3.92 percent higher on R0.53 yesterday.