Waterberg Coal still in the black, CEO says
CONFLICTING reports on the Waterberg Coal Company, a steep plunge in its share price and an ominous silence from owners of the BEE shares, have raised serious questions about the future of this ASX- and JSElisted operation.
The Australia-based operation, due to break ground next year, has been billed as set to become the secondbiggest coal producer on the continent with 4 billion tons of coal on just two of its 10 farms.
Yet if a review of its public filings for the past six months is anything to go by, the company was cash-strapped at the end of last December.
Last year, Waterberg Coal’s share price hit a healthy A$0.26 when news came out of a 30-year “memorandum of understanding” to provide Eskom with 10 million tons of coal a year from 2015, rising to 17 million tons. On Friday, Waterberg’s share price was trading at a paltry A$0.07c.
On the JSE, Waterberg’s share price has shed two-thirds of its value since March and now sits at 71c. What went wrong? CEO Stephen Miller said this week that the share-price drop “didn’t reflect the value of the company”.
Miller blamed it partly on the investment flight from South Africa and a lack of investor faith in resources.
In its financial report for the halfyear to December, Waterberg Coal said that if it did not raise money soon “there is significant uncertainty whether the group will continue as a going concern”.
The company made a A$21.3-million after-tax loss for those six months.
It hasn’t helped that Waterberg has spent much of the past seven years in corporate brawls. One of these was the hostile takeover of Firestone Energy that saw both companies gagged by the Australian takeovers panel.
Waterberg Coal ended its takeover of Firestone earlier this year, obtaining just 43% of the company, well short of the 100% target.
The half-year report to December last year showed that Waterberg’s current accounts payable were A$5.7million while its “free cash” was only A$400 000. The coal company’s net cash outflows from its operating activities for that period amounted to A$2.7-million.
However, Miller said this week that Waterberg had since been backed by a “big-name family business” based in London to the tune of A$5.6-million.
Miller said a further A$2.5-million had been raised from banking group Investec in a straight equity deal.
A$2.5-million had also been raised from London-listed Global Resources Investment Trust (Grit) through a share swap deal in which Waterberg Coal sold its Grit shares to realise the cash. Grit last traded at 30p.
Waterberg has also added strong political credentials to its board.
Mathews Phosa, the former treasurer of the ruling African National Congress (ANC), added the chairmanship of Waterberg to his duties after Waterberg’s previous chairman Brian McMaster resigned “with immediate effect” in March.
McMaster was one of several directors who resigned since the end of the year. He said he was bound by a confidentiality agreement, and was therefore unable to comment on Wa- terberg Coal or his departure.
But another potential headache facing the coal producer is a legal tussle between its black empowerment shareholders.
Waterberg Coal’s BEE partner Sekoko, which is run by high-profile entrepreneur Tim Tebeila, is involved in a joint venture with women’s empowerment group Uzalile, headed by former beauty queen Basetsana Kumalo.
But a toxic legal battle began earlier this year when Uzalile claimed it was being short-changed in the deal, and demanded the joint venture be unwound.
Tebeila this week insisted he had nothing to do with the issue, and had “absolutely zero comment on these things”.
However, Sekoko chief financial officer Amanda Mathee said the matter was still not resolved, and was with the lawyers.
Kumalo and Lindiwe Leketi, a partner in Uzalile, did not reply to e-mails, phone calls or SMSes.