| Tue 15 Apr 2008, 7:00 | | KEH - Keaton Energy - Abridged Pre-Listing Stateme |
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JSE
KEH
KEH - Keaton Energy - Abridged Pre-Listing Statement
Keaton Energy Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/011090/06)
Share code: KEH & ISIN: ZAE000117420
("Keaton Energy" or "the Company" or "the Group")
ABRIDGED PRE-LISTING STATEMENT
This abridged pre-listing statement is not an invitation to the public to
subscribe for ordinary shares, nor an offer for the sale of ordinary shares in
Keaton Energy, but is issued in compliance with the Listings Requirements of
the JSE Limited ("JSE") for the purpose of providing information to the public
with regards to Keaton Energy.
The JSE has granted a listing to Keaton Energy in the "Coal" sector under the
abbreviated name "Keaton", share code: KEH, ISIN: ZAE000117420, with effect
from the commencement of business on Tuesday, 22 April 2008. The listing of
Keaton Energy is by way of introduction.
1. Introduction to Keaton Energy
Keaton Energy is a coal exploration and development company, which has been
created to exploit opportunities arising from a combination of, the increased
market demand for coal and the changed mineral rights dispensation in South
Africa. Keaton Energy has six separate exploration subsidiaries ("exploration
subsidiaries"), each of which has Historically Disadvantaged Persons ("HDP") as
partners in compliance with the Minerals and Petroleum Resources Development
Act, No. 28 of 2002, as amended ("MPRDA"). These exploration subsidiaries hold
the Group`s five exploration rights and numerous exploration right
applications, at various stages of regulatory approval.
2. Keaton Energy`s projects
2.1 Sterkfontein and Delmas projects
The projects under consideration in the Competent Person`s Report (included in
the pre-listing statement) consist of two properties in the Delmas and Bethal
districts of Mpumalanga, South Africa, separated by a distance of 68 kilometres
("km"). These properties are referred to as the Delmas and Sterkfontein project
areas. The Delmas project area is located 80km due east of the centre of
Johannesburg and the Sterkfontein project area is located 143km east/south-
east of Johannesburg.
Below is a summary of the coal resource base at the Group`s two advanced
exploration projects:
Keaton Energy`s projects mineable in-situ tonnage for the various properties
Gross in-situ Geological
Resource area tonnage (`000 tonnes) losses (%)
Delmas project area
No.5 seam
- SWest 400 15
- Central 2,200 15
- NWest 1,000 15
- East 600 15
No.5 seam bituminous 4,200
No.4 seam
- Central 30,900 15
- East 11,700 15
- West 28,000 15
No.4 seam bituminous 70,600
No.2 seam
- Central 36,000 15
- East 12,100 15
- West 25,300 15
No.2 seam bituminous 73,400
Sub-total bituminous 148,200
No.4 seam
- Central 6,200 30
- East 3,400 30
- West 25,200 30
No.4 seam pseudo anthracite 34,800
No.2 seam
- Central 9,100 30
- East
- West 20,700 30
No.2 seam pseudo anthracite 29,800
Sub-total pseudo anthracite 64,600
Total Delmas project area 212,800
Sterkfontein project area
No.4 seam South 19,200 10
No.4 seam North 1 4,000 15
No.4 seam North 2 16,600 15
Sub-total 39,800
Grand total 252,600
Mineable in-situ
Resource area tonnage (`000 tonnes) Classification
Delmas project area
No.5 seam
- SWest 300 Inferred coal resource
- Central 1,900 Indicated coal resource
- NWest 900 Measured coal resource
- East 500 Measured coal resource
No.5 seam bituminous 3,600
No.4 seam
- Central 26,300 Indicated coal resource
- East 10,000 Measured coal resource
- West 23,800 Indicated coal resource
No.4 seam bituminous 60,100
No.2 seam
- Central 30,700 Indicated coal resource
- East 10,300 Measured coal resource
- West 21,500 Measured coal resource
No.2 seam bituminous 62,500
Sub-total bituminous 126,200
No.4 seam
- Central 4,400 Indicated coal resource
- East 2,400 Measured coal resource
- West 17,600 Indicated coal resource
No.4 seam pseudo
anthracite 24,400
No.2 seam
- Central 6,400 Indicated coal resource
- East
- West 14,500 Measured coal resource
No.2 seam pseudo anthracite 20,900
Sub-total pseudo anthracite 45,300
Total Delmas project area 171,500
Sterkfontein project area
No.4 seam South 17,300 Measured coal resource
No.4 seam North 1 3,400 Indicated coal resource
No.4 seam North 2 14,100 Indicated coal resource
Sub-total 34,800
Grand total 206,300
The coal qualities in the Delmas project area indicate that the bituminous coal
would have to be beneficiated to produce a suitable coal for local power
generation. The No. 4 seam would produce a 22.5 Calorific Value ("CV") (MJ/kg)
product at a yield of 62%. The No. 2 seam would produce a 22.2 CV (MJ/kg)
product at a yield of 61%. After beneficiation, the high ash pseudo anthracite
coal could be suitable for export to power stations burning low volatile coal.
The coal qualities in the Sterkfontein project area indicate that the raw coal
is suitable as a feedstock for local power generation. Beneficiation
simulations indicate that the No. 4 seam could produce a 27.5 CV (MJ/kg)
primary product at a yield of 50% and a 20.5 CV (MJ/kg) middlings product at a
yield of 32%.
2.2 Exploration pipeline
2.2.1 Klipfontein project
The Klipfontein project was the first project explored by the Group. It is
located in the Emalahleni magisterial district near Kendal, 30km south-west of
the Group`s Delmas project area.
In total, 25 holes were drilled on the Klipfontein project. The initial
drilling phase was spaced at 400 metres. No coal was intersected on the eastern
portions of the project area. Coal was intersected in a total of four holes,
all towards the north of the property, in a localised area of approximately 4.5
hectares ("ha").
As a consequence of the limited information available and the fact that the
estimated coal resource at the Klipfontein project is not substantial from an
overall Keaton Energy perspective, the Klipfontein project has not been
included in the Competent Person`s Report.
2.2.2 Other
Following desktop studies covering regional geological potential, available
historical data and existing mineral right holdings, a number of additional
opportunities have been identified in the Ermelo, Waterberg, Utrecht and Klip
River coalfields. Once exploration rights are granted and executed,
comprehensive exploration programmes will commence.
Set out in the table below is a summary of Keaton Energy`s exploration
pipeline:
Prospect Exploration subsidiary Extent
Ermelo prospects Amalahle Exploration (Proprietary) Limited 2 287 ha
Rafcoal Mining (Proprietary) Limited 975 ha
Waterberg prospects Keaton Mining (Proprietary) Limited 1 189 ha
Utrecht prospects Intshe Coal (Proprietary) Limited 50 887 ha
Klip River prospects Izwi Coal (Proprietary) Limited 407 ha
Mafla Coal (Proprietary) Limited 4 509 ha
Prospect Exploration subsidiary Application status
Ermelo prospects Amalahle Exploration (Proprietary) Limited Accepted
Rafcoal Mining (Proprietary) Limited Accepted
Waterberg prospects Keaton Mining (Proprietary) Limited Accepted
Utrecht prospects Intshe Coal (Proprietary) Limited Accepted
Klip River prospects Izwi Coal (Proprietary) Limited Accepted
Mafla Coal (Proprietary) Limited Accepted
3. Purposes of listing on the JSE
The main purposes of listing on the JSE are to:
3.1 comply with the undertaking made by Keaton Energy and the original
shareholders in the Company to the seed capital investors to list Keaton
Energy`s ordinary shares on the JSE within 12 months of completing the seed
capital raising, which was completed in November 2007;
3.2 provide investors with a recognised market for trading Keaton Energy
ordinary shares;
3.3 provide Keaton Energy with a public profile, enhancing its ability to
attract new coal opportunities and suitable HDP partners for it s ventures; and
3.4 provide Keaton Energy with a potential source of additional equity capital.
4. Prospects
The coal mining industry in which Keaton Energy is operating has undergone two
recent fundamental changes. Firstly, the introduction of the MPRDA`s "use it or
lose it" principle has paved the way for coal explorers and developers, such as
Keaton Energy, to gain access to exploration rights over ground previously held
as undeveloped properties, by either major mining houses or private land
owners. Secondly, the domestic and international market for thermal coal has
seen increased demand and constrained supply, leading to dramatic increases in
current and forecast prices.
The Keaton Energy board believes that the new mineral rights dispensation
created by the MPRDA will provide further opportunities to Keaton Energy to
either apply for additional exploration rights in partnership with HDPs or to
partner parties who have already been awarded exploration rights. Keaton Energy
is well-positioned to act as a technical and financial partner to such
exploration rights` holders. Keaton Energy will, however, be selective in
entering into partnerships over new properties and will first look to expand
existing projects through the acquisition of interests in exploration rights
that have been awarded over contiguous properties.
The Keaton Energy board further believes that the thermal coal demand/supply
situation, both domestically and internationally, will result in future coal
prices that are above long-term real average prices. Existing global export
coal production capacity is geared to serve the traditional markets of Europe,
the United States and Japan, however China and India have now become major
players in the international market for coal. China is a major player because
of its recent change from being a net exporter of coal to being a net importer.
India is a major player because it is building significant thermal generating
capacity in its coastal areas and is expected to compete aggressively for coal
previously sold into the traditional markets. Inland demand for coal in South
Africa is expected to remain strong as domestic users of coal find themselves
being marginalised - firstly as producers seek to take advantage of high export
prices and secondly as Eskom rebuilds its stockpiles, recommissions mothballed
power stations, increases its coal burn at existing power stations and
increases its capacity.
Keaton Energy has both the access to capital and the management team to pursue
opportunities created through the confluence of the changed economics of the
South African coal market and the opening up of that market through the
implementation of the MPRDA.
5. The private placing
During April 2008, Keaton Energy raised capital from selected institutional and
retail investors ("the private placing"). Through the private placing, Keaton
Energy accepted irrevocable applications from investors to subscribe for
10 000 000 new Keaton Energy ordinary shares at a price of R10.00 per Keaton
Energy ordinary share, totalling R100 000 000. The ordinary shares to be issued
in the private placing will rank pari passu in all respects with the existing
Keaton Energy ordinary shares.
6. Directors
The full names, qualifications, nationalities, ages, business addresses and
functions of the directors of Keaton Energy are set out below:
Full name, qualification,
nationality and age Business address Function
John David Salter 2nd Floor Independent
PhD, BSc (Hons), FSAIMM Wanderers Building, Non-executive
British The Campus Chairman
(49) 57 Sloane Street
Bryanston, 2021
Paul Bradley Maxwell Miller Ground Floor Managing
BCom (Hons) (cum laude) Eland House, The Braes Director
South African 3 Eaton Road
(38) Bryanston, 2021
Steven Michael Rupprecht Ground Floor Technical
PhD, BSc, Mine Manager`s Certificate Eland House, The Braes Director
of Competency (Metalliferous Mines) 3 Eaton Road
FSAIMM, PrEng Bryanston, 2021
USA
(44)
Johan Gabriel Schonfeldt Ground Floor Financial
MCom, CA(SA) Eland House, The Braes Director
South African 3 Eaton Road
(37) Bryanston, 2021
Phoevos Pouroulis c/o Chromex Mining plc Non-executive
BSc Business Admin (cum laude) Ground Floor Director
South African/Cypriot Eland House, The Braes
(33) 3 Eaton Road
Bryanston, 2021
Lizwi Xolisile Mtumtum Unit B7 Independent
BA (Economics/Accounting) The Stables Non-executive
South African 13, 3rd Road Director
(36) Malboro Drive
Linbro Park, 2065
Antoinette Prudence Elaine Sedibe Block B Wedgefield Non-executive
BAdmin Office Park Director
South African 17 Muswell Road
(42) Bryanston, 2021
7. Share capital
At the listing date the authorised share capital of Keaton Energy will comprise
250 000 000 ordinary shares with a par value of 0.1 cent each. The Company will
have an issued share capital of R142 741, comprising 142 741 293 ordinary
shares with a par value of 0.1 cent each and a share premium account of
R433 193 560 (prior to share issue expenses).
8. Copies of the pre-listing statement
An electronic version of the pre-listing statement is available for download
from the Company`s website www.keatonenergy.co.za from today, Tuesday, 15 April
2008. Copies of the pre-listing statement are only available in English and may
be obtained during normal business hours from today until Tuesday, 22 April
2008 from:
Keaton Energy Ground Floor, Eland House
The Braes
3 Eaton Road
Bryanston, 2021
Nedbank Capital Block F, 3rd Floor, 135 Rivonia Road
Sandown
Gauteng, 2196
9. Salient dates and times
2008
Release of abridged pre-listing statement on SENS on Tuesday, 15 April
Publication of pre-listing statement on Tuesday, 15 April
Listing of the ordinary shares on the JSE at 09:00 on Tuesday, 22 April
All dates and times are subject to change and any changes will be released on
the Securities Exchange News Service of the JSE ("SENS") and published in the
press.
Bryanston
15 April 2008
Investment bank, corporate adviser and sponsor
NEDBANK CAPITAL
Attorneys
ROUTLEDGE MODISE ATTORNEYS
Financial adviser
ROTHSCHILD
Independent reporting accountants and auditors
KPMG
Independent competent person
COFFEY MINING
Date: 15/04/2008 07:00:01 Produced by the JSE SENS Department.
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