| Thu 26 Jun 2008, 8:45 | | SAH - South African Coal Mining Holdings Limited - Major company |
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SAH
SAH
SAH - South African Coal Mining Holdings Limited - Major company
expansion - production and infrastructure - Announcement of rights offer
South African Coal Mining Holdings Limited
(Incorporated in the Republic of South Africa)
Registration number 1994/009012/06
Share code: SAH
ISIN: ZAE000102034
("SACMH" or "the company")
Major company expansion - production and infrastructure
Announcement of rights offer
Highlights
- Rights offer to raise R100m at R4.00 per share
- Commitment from major shareholders holding a combined 65.3% interest
in SACMH to fully follow their rights in relation to the rights
offer
- Infrastructure investment to improve cost effectiveness and
facilitate expansion -Umlabu plant upgrade and New Voorslag siding
construction
- Production to increase from 95ktpm to 150ktpm - two new underground
sections
- Total cost of approximately R400m; balance of funding to be from
general issue of shares for cash of approximately R50m and from debt
- Expansion fully aligned with SACMH`s growth objectives
Karl Gribnitz, the CEO of SACMH said:
"Having established SACMH as a profitable black owned and controlled coal
mining company, we are now making a major investment in the business to
increase production substantially and to become much more efficient. The
Umlabu plant upgrade and new siding will cut out the need for any toll
treatment and use of other sidings in the area, meaning significant cost
savings. We will be positioned to sell all our export quality coal
through our increased RBCT allocation, which we expect to become
available in the middle of next year."
1 .Introduction
Following an extensive review of its organic growth options, as discussed
with investors during the recent annual results presentation and
roadshow, SACMH has now decided to embark on a major investment in the
infrastructure of the Umlabu mine. - This is in order to facilitate a
substantial capacity upgrade and greater operational efficiencies. The
group has already established a platform for sustainable coal operations
and this expansion is fully aligned with SACMH`s growth objectives.
The cost of the expansion is estimated at about R400 million and the
board has decided to raise a portion of the capital required by way of a
rights offer for R100 million through the issue of 25 million new shares
("the rights shares") at a price of R4.00 per rights share in a ratio of
16.47239 rights shares for every SACMH share held on the record date
("the rights offer"). The remainder of the funding will be raised from
debt and through further equity issues for about R50 million. The equity
issues will be in terms of the general authority to issue shares for cash
granted to the directors of the company at the annual general meeting
held on 30 April 2008.
Royal Bafokeng Holdings (Proprietary) Limited, Royal Bafokeng Capital
(Proprietary) Limited and Strider Holdings (Proprietary) Limited, which
together hold a combined interest in SACMH of 65.3%, have committed to
follow their combined rights fully in respect of the rights offer. The
rights offer has not been underwritten.
2. Rationale for the rights offer
In order to improve the profitability of its Umlabu mine, SACMH is
planning to:
- improve the cost effectiveness of its business by substantially
reducing both the level of toll treating and the use of other
sidings in the region; and
- improve unit revenue by limiting the fraction of export quality coal
sold into the domestic market or into the export market through
third party Richards Bay Coal Terminal ("RBCT") allocation.
The combination of the above requires a substantial investment by SACMH
into its processing and logistics infrastructure. The following capacity
upgrades are to be undertaken (all figures are approximates):
- production upgrade: two new underground production sections to be
commissioned to increase run of mine ("ROM") production from 95 ktpm
to 150 ktpm;
- plant upgrade: Umlabu processing plant capacity to be increased from
35 ktpm to 110 ktpm in order to avoid toll treatments costs which
are R22/t higher than own plant costs;
- siding construction: Umlabu siding to be constructed with a capacity
of 60 ktpm in order to avoid transport to other sidings in the
region which cost R96.50/t more than transport to the Umlabu siding;
and
- RBCT allocation upgrade: RBCT allocation to be increased from 17.25
ktpm to 58.85 ktpm.
The result of implementing these capacity upgrade programmes will be a
mine capable of producing 150 ktpm ROM, of which 40 ktpm will be sold to
Eskom, with the balance of 110 ktpm processed in-house through the
upgraded plant facility for export. Following plant yield losses, it is
estimated that about 60 ktpm will be exported, almost all of it through
the increased RBCT allocation.
The R100 million to be raised in the rights offer will be directed at the
earlier-dated capital items such as the plant upgrade, the siding civils
and the initial stages of the flask loading system.
3. Summary of capacity upgrade programmes
The table below summarises the above-mentioned capacity upgrade programme
in terms of cost, and expected start and completion dates.
Estimated Expected start Expected
capital date completion
expenditure (R date
`000)
Production upgrade
(2 sections)
Continuous miner 43,000 July 2008 Aug 2008
Other 41,000 July 2008 Aug 2008
Total 84,000
Plant upgrade
Current plant 7,500 June 2008 July 2008
upgrade
New plant 42,000 Nov 2008 Jan 2009
Total 49,500
Siding construction
Siding property 20,000 June 2008 July 2008
Siding civils 42,000 June 2008 Sep 2008
Flask loading system 45,100 Aug 2008 Dec 2008
Electrification of 94,500 Aug 2008 July 2008
railway
Conveyor to siding 21,000 Oct 2008 Jan 2009
Total 222,600
RBCT Phase V
allocation
Total 43,000 Aug 2009 Aug 2009
Grand Total 399,100
4. Proposed dates relating to the rights offer
The proposed dates relating to the rights offer are set out below:
2008
Last day to trade in SACMH shares in
order to participate in the rights offer
(cum entitlement) Friday, 11 July
Listing of and trading in the letters of
allocation on the JSE Limited ("JSE")
commences at 09:00 on Monday, 14 July
SACMH shares commence trading ex-rights
on the JSE at 09:00 on Monday, 14 July
Record date for the rights offer Friday, 18 July
Rights offer opens at 09:00 on Monday, 21 July
Last day for trading letters of
allocation on the JSE Friday, 1 August
Listing of rights shares and trading
therein on the JSE commences on Monday, 4 August
Payment to be made and form of
instruction lodged by holders of
certificated shares with the transfer
secretaries by 12:00 on Friday, 8 August
Rights offer closes at 12:00 (see note
2) on Friday, 8 August
Record date for the letters of
allocation Friday, 8 August
Rights shares issued and posted to
holders of certificated shares on or
about Monday, 11 August
CSDP or broker accounts in respect of
holders of dematerialised shares debited
and updated with rights shares on Monday, 11 August
Results of rights offer announced on
SENS Monday, 11 August
Results of rights offer published in the
press Tuesday, 12 August
Rights shares in respect of excess
applications (if applicable) issued on
or about Tuesday, 12 August
Refund cheques posted to holders of
certificated shares, if applicable, in
respect of excess applications on or
about Tuesday, 12 August
Notes:
1. Share certificates in respect of SACMH shares may not be
dematerialised or rematerialised between Monday, 14 July 2008
and Friday, 18 July 2008, both days inclusive.
2. CSDPs effect payment on a delivery versus payment method in
respect of holders of dematerialised shares. Holders of
dematerialised shares are required to notify their CSDP or broker
of their acceptance of the rights offer in the manner and time
stipulated in the custody agreement governing the relationship
between them and their CSDP or broker.
3. Holders of dematerialised shares will have their accounts at
their CSDP or stockbroker credited with their rights entitlement
on Monday, 21 July 2008. Holders of certificated shares will have
their rights entitlements generated in electronic form and held at
Computershare Nominees (Pty) Limited on Monday, 21 July 2008.
5. Conditions precedent
The rights offer is conditional upon:
- the granting by the JSE of a listing for the letters of allocation
and the rights shares; and
- the registration by the Companies and Intellectual Property
Registration Office of all documents required in respect of the
rights offer.
Enquiries:
SACMH 011 748 2800
Karl Gribnitz, CEO
Melanie Steyn, Executive Director
College Hill 011 447 3030
Nicholas Williams 082 600 2192
Nandile Ngubentombi 082 825 8004
Mirkwood
26 June 2008
Corporate adviser : QuestCo
Sponsor : QuestCo Sponsors
Date: 26/06/2008 08:45:01 Produced by the JSE SENS Department.
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