Cash-strapped CoAL able to cut operating loss

COAL of Africa’s share price gained more than 7 percent on the JSE yesterday morning after the company reported that it had narrowed its losses for the six months to end December.

But the share closed 1.92 percent lower at 51c.

The company managed to decrease its operating loss for the period by $1.33 million (R17.4m) to $12.97m, down from $14.3m reported a year ago.

The biggest contributor to this loss was an amount of $10.6m, which was impairment on the intangible asset due to CoAL deciding not to renew its agreement with Terminal de Carvao da Matola.

CoAL managed to reduce its headline loss per share. It decreased to 0.12 US cents a share compared to a headline loss of 0.75 US cents a share.

CoAL is a coal exploration, development and mining company operating in South Africa. Its key projects include the Vele Colliery (coking and thermal coal), the Greater Soutpansberg Project or MbeuYashu, and CoAL’s Makhado Project (coking and thermal coal).

The company expects its financial position to turn around soon and is in the process of evaluating a number of opportunities to acquire a cash-generating asset that meets its acquisition criteria.

“We continue to engage with potential funders to ensure any potential opportunity can be appropriately financed.

“The company is also aware of the current cash balances and the requirement to fund the last legacy liability in June 2017,” CoAL said.

The company is experiencing cash challenges at the moment. The company has cash and cash equivalents of $7m at the end of the period, significantly lower than the $19.5m at the end of June last year.

As a result, it has entered into a conditional agreement with an external party to raise $10m via the issuance of new equity, which will be subject to shareholder approval.

“A circular including further details of this investment will be sent to shareholders when the company is in a position to disclose additional details. The use of these funds is restricted until March 31, 2017,” it said.

“However, if certain conditions precedent are not met by this date, the funds can be used at the company’s discretion subsequent to receipt of shareholder approval and become unrestricted.”

The company will update the market on or around March 31.

The company is waiting for an integrated water use licence from the Department of Water and Sanitation at Vele.