CoAL winds up col­liery ac­qui­si­tion for R275m

The Star Early Edition - - COMPANIES - Di­neo Faku

SHARES of Coal of Africa (CoAL), the Aus­tralian-based ju­nior coal pro­ducer, dropped 8.33 per­cent to close at 44 cents a share on the JSE yes­ter­day, fol­low­ing news that it had com­pleted the R275 mil­lion ac­qui­si­tion of Uitkomst Col­liery from Pan African Resources.

CoAL said that it would assume own­er­ship, con­trol and man­age­ment of the KwaZu­luNatal col­liery from Fri­day.

“We look for­ward to in­cor­po­rat­ing the Uitkomst Col­liery into CoAL, which we be­lieve rep­re­sents a trans­for­ma­tive op­por­tu­nity to pro­vide cash flow to sup­port CoAL as the com­pany con­tin­ues to progress its flag­ship Makhado project,” CoAL’s chief ex­ec­u­tive, David Brown, said.

Share is­sue

In a sep­a­rate state­ment, Pan African Resources said yes­ter­day that it would re­ceive R125m in cash as part of the deal and R125m through the is­sue of more than 261 mil­lion new or­di­nary shares in CoAL on Fri­day.

It also said the bal­ance of R25m was ex­pected to be made through a de­ferred pay­ment, with in­ter­est, any time be­fore the sec­ond an­niver­sary of the ef­fec­tive date.

“If the de­ferred con­sid­er­a­tion, and any in­ter­est ac­crued thereon, is not paid to Pan African by the sec­ond an­niver­sary of the ef­fec­tive date, Pan African may elect to have the amount due to it set­tled through the is­sue of new CoAL or­di­nary shares at a price per share equal to the 30-day vol­ume weighted av­er­age price of a CoAL or­di­nary share as traded on the ex­change op­er­ated by the JSE pre­vail­ing on the last trad­ing day im­me­di­ately prior to the date that such elec­tion is made,” the com­pany said.

CoAL has been a dis­ap­point­ment for in­vestors on the JSE, with its share price los­ing 21 per­cent in the year to date.

Al­though CoAL has a pipe­line of projects that will sup­port it for many years, it has said it would be un­able to gen­er­ate rev­enues from its projects over the next two to three years.

The com­pany said that it needed to ac­quire a cash-gen­er­at­ing as­set, par­tic­u­larly af­ter its plan to ac­quire Uni­ver­sal Coal had fallen through last year.

CoAL said that the main rea­son its plans to ac­quire Uni­ver­sal had lapsed was the sig­nif­i­cant un­cer­tainty over the cash-gen­er­at­ing po­ten­tial of Uni­ver­sal’s New Cly­des­dale Col­liery. It was re­ported at the end of 2015 that be­tween 30 per­cent and 40 per­cent of the value of Uni­ver­sal was con­tained in New Cly­des­dale, which is in Mpumalanga.

Eskom con­tract

CoAL said in its 2016 an­nual re­port that Cly­des­dale’s con­tract with Eskom was due to have been signed dur­ing 2015, with pro­duc­tion ex­pected by the first half of last year.

“Un­for­tu­nately, by the time we came to clos­ing out the trans­ac­tion, this Eskom mat­ter had not been re­solved. This would have im­pacted on our abil­ity as an en­larged group to re­deem the loan notes as and when they were due,” the an­nual re­port said.

CoAL which has a mar­ket cap of R1.15 billion, has been a dis­ap­point­ment for in­vestors on the JSE, with its share price los­ing 21 per­cent in the year to date.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.