| Wed 30 Jul 2008, 10:39 | | CZA - Coal of Africa Limited - Report for the June 2008 Quarter |
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CZA
CZA
CZA - Coal of Africa Limited - Report for the June 2008 Quarter
Coal of Africa Limited
(previously, "GVM Metals Limited")
(Incorporated and registered in Australia)
(Registration number ABN 008 905 388)
Share code on the JSE Limited: CZA
ISIN AU000000CZA6
Share code on the Australian Stock Exchange Limited: CZA
ISIN AU000000CZA6
(`CoAL` or `the Company`)
Report for the June 2008 quarter
Coal of Africa Limited (`CoAL` or `the Company`) is pleased to announce its
operational report for the quarter ended 30 June 2008. A full copy of this
report, as released today on the ASX, is available at the Company`s website,
www.coalofafrica.com.
Highlights
- CoAL secures long term Black Economic Empowerment status with
Mvelaphanda Holdings and associated companies, ensuring the Company
complies with the 2014 South African legislative targets for BEE
ownership.
- ArcelorMittal, the world`s largest steel company, takes a 17.8% stake
and agrees to enter into an off-take agreement with CoAL to secure a
minimum of 2.5 million tonnes annually from the Company`s Limpopo coal
projects, with an option to secure a further 2.5 mtpa.
- Upgrade of the Company`s Vele (previously Thuli) soft coking coal
resource to 441 million gross in situ tonnes, of which 133mt is
"measured."
- Agreement reached on the sale of the Holfontein coal project to Lachlan
Star Limited for A$25 million.
- CoAL completed the acquisition of the remaining 30% of the Mooiplaats
project, taking the Company`s interest to 100%.
- Nimag (Pty) Ltd`s nickel magnesium alloy business generated a 12 month
EBIT of A$3.1 million.
- Section 11 approval received satisfying the last remaining condition
for the acquisition of 60% of the 32,584 hectare Tshikunda coal
project.
- Appointment of Riaan van der Merwe as Chief Operating Officer.
- Cash balance at the end of the quarter was A$254 million. The Company
has no debt.
Commenting on the results today, Simon Farrell, Managing Director of CoAL,
said, "Progress on the Company`s coal projects is continuing according to
plan and the rehabilitation of the Mooiplaats box-cut is now completed. The
results of the exploration programmes on the Vele and Makhado projects
confirm our expectations of both coal quality and coal reserves with Mining
Right applications for both projects to be submitted in the September
quarter. This progress, together with the enhancement of CoAL`s shareholder
base, positions the Company uniquely whereby it has significant cash
reserves for large scale development and an off-take agreement that will
allow the Company to take advantage of the current resource prices within a
reduced risk environment."
DISCUSSION OF RESULTS
Corporate Activities
Black Economic Empowerment Status
Agreement was reached whereby Coal Investments Limited (`CIL`) will
subscribe for shares and options which, if exercised, will result in African
Global Company l, LP (`AGC`)*, CIL and their affiliates owning in excess of
26% of the Company. This will ensure that CoAL satisfies the South African
legislative requirements whereby Black Economic Empowerment ("BEE") groups
must own at least a 26% equity interest in mining companies by 2014.
The agreement resulted in CoAL issuing 25.5 million shares for GBP33.15
million and, subject to Australia`s Foreign Investment Review Board
approval, CoAL will issue a further 12 million shares for GBP15.6 million.
Combined with the 33.8 million shares in the Company already held by African
Global Capital (a Mvelaphanda Holdings affiliate), this will result in
CoAL`s BEE partners having approximately 17.4% of CoAL`s issued shares. In
addition, subject to shareholder approval, CIL will be issued 50 million
options exercisable at GBP1.80 each on the satisfaction of certain
conditions, namely CoAL converting its New Order Prospecting Rights on the
Makhado and Vele projects to New Order Mining Rights within 12 months of the
date of entering this agreement. Furthermore, CIL cannot dispose of the
options or the shares issued to it within 12 months from issue unless the
disposal is to a CIL affiliate or another BEE group.
*AGC is the first fund managed by a private equity initiative involving
amongst others New York based Och-Ziff Capital Management Group LLC and
Mvelaphanda Holdings (Pty) Ltd.
Placement and Off-Take Agreement with ArcelorMittal
During the quarter CoAL signed an agreement whereby ArcelorMittal, the
world`s largest steel company, subscribed for 60 million shares in the
Company (approximately 16% of the issued capital) for GBP66.7 million.
Furthermore, ArcelorMittal has agreed to enter into an off-take agreement to
annually secure a minimum of 2.5 million tonnes (which may be increased to
five million tonnes) of coking coal from CoAL`s Makhado and Vele coal
projects. As part of the transaction, ArcelorMittal has the right to
nominate a director to the CoAL board.
Terms and conditions of the off-take agreement are subject to formal
documentation but the two parties have agreed in principle that the coal
will be delivered to the town of Musina in the Limpopo province at a Free-on-
Rail price linked to the Free-on-Board price of Kestrel (East coast of
Australia) hard coking coal assuming similar quality and specification
parameters.
Coal Activities
Mooiplaats Coal Project (100%)
During the quarter CoAL shareholders approved the issue of 4.75 million
shares satisfying the final acquisition payment for the remaining 30% of the
project. By the end of the quarter, orders for over A$28 million (ZAR200
million) of mining equipment had been placed with delivery to commence in
the September quarter.
Access to the decline shaft was obtained during the quarter allowing for the
de-watering of the box-cut. Development of the mine site has commenced and
management expect mining to commence towards the end of the third quarter of
this year, with production in the following quarter. Negotiations were
initiated with suppliers of wash plants, which are anticipated to be
commissioned by February 2009.
The results of the production related drilling concluded during the quarter
were included in the geological model, allowing for the finalisation of
production scheduling and the mining contract. CoAL has processed all of
the geological information and re-built the geological model internally,
verifying the models presented by the contract miners. This model has been
submitted to independent mine planners who are generating life-of-mine
schedules, the results of which are expected in August.
Once signed, details of the mining contract and revised production
scheduling will be released to the market, expected to occur prior to the
end of August. Additional production related drilling has commenced on the
neighbouring farm Klipbank to identify the best site for the second decline
(the Beta boxcut).
Discussions with potential off-take customers continued during the quarter
and a non-exclusive marketing agreement for the project was concluded with
Oreport (Pty) Ltd. Negotiations with Transnet regarding rail allocation for
Richards Bay export coal, together with port allocation agreements,
continued favourably and are expected to be finalised shortly.
Makhado Coal Project (formerly Baobab) (100%)
During the quarter, a 5,000 metre drilling programme to define the outcrop
of the coal zones and to verify the positions of the dolerite sill
intersections in the project area commenced. The large diameter (123mm)
core drilling sites prepared for the drilling programme will enable this to
be completed by the end of August. The large diameter drilling programme
will yield samples for detailed coking as well as other coal parameter
testing.
Digitisation of the exploration data acquired from Exxaro Limited was
finalised during the quarter under review. Together with the results of
exploration work previously undertaken, this resulted in the creation of
geological models that were included in the updated resource statement
released in July that increased the resource base to 1.33 billion tonnes.
These models have been submitted to independent mine planners who are in the
process of generating life-of-mine schedules.
Negotiations with Rio Tinto with regards to the rationalisation of farms
continued during the three months resulting in the signing of a Memorandum
of Understanding in July. The rationalisation of farms results in farms
being swapped by the parties, while others will form part of a joint venture
between Rio Tinto and CoAL.
Vele Coal Project (formerly Thuli) (74%)
LudikCore (Pty) Ltd and GeoMechanics (Pty) Ltd continued drilling on the
Vele Coal Project and by the end of June had completed phase one of the
exploration project, comprising some 65 boreholes. The completed drilling
programme, together with the data acquired earlier, resulted in an upgrade
of the previously reported JORC/SAMREC compliant `Indicated` resource. This
programme, covering approximately 80% of the project area, delivered a
resource of 441.47 million gross in situ tonnes, of which 133.84 million
tonnes occur in the `Measured` status and 76.58 million tonnes in the
`Indicated` status, with the majority of the coal being open-castable.
The Company proposes to undertake a further 65 hole drilling programme which
is expected to result in over 70% of the resource being classified in the
JORC/SAMREC `Measured` category.
An additional large diameter (123mm) drilling programme was undertaken
during the quarter. Drilling commenced on the first of three sites with the
remaining two sites to be drilled by the end of August 2008. Samples from
the first large diameter drilling site have been submitted, in conjunction
with ArcelorMittal, for coking coal analysis.
The geological model for CoAL`s Vele coal project is undergoing similar
evaluation to the Makhado coal project with regards to the mine life and
mine design, which is expected to yield a scoping study level schedule and
cost estimation in the next quarter.
Holfontein Coal Project (100%)
During the June quarter, exploration on the project (including the
Wildebeesfontein portions of the project) continued with over 8,800 metres
drilled. Coal samples have been submitted for analysis and selected samples
will be tested for their metallurgical coal properties with results of these
tests expected in August. The results of the drilling programme will be
geologically modelled and are expected to result in a JORC/SAMREC compliant
`Measured` resource.
CoAL has reached agreement to sell 100% of the Holfontein coal project to
Lachlan Star Limited for A$25 million, payable in a mix of cash and shares
on the satisfaction of certain conditions. The transaction will include an
upfront payment upon transfer of the project to Lachlan Star and a series of
milestone payments linked to the granting of the New Order Mining Right as
well as certain production targets. Following the conclusion of the sale,
CoAL will be the largest shareholder in Lachlan Star.
Nimag Group of Companies (100%)
The Nimag Group`s unaudited profit before interest and tax for the twelve
months was ZAR21 million (A$3.1 million). The nickel magnesium business
continued to experience tough trading conditions compared to the previous
financial year.
Authorised by
Simon Farrell
Managing Director
30 July 2008
For more information contact:
Simon Farrell, Managing Director CoAL +61 417 985 383
or +61 8 9322 6776
Petronella Gorrie The Event Shop +27 82 827 8815
Jos Simson/Leesa Peters Conduit PR +44(0) 20 7429 6603
Olly Cairns / Romil Patel Blue Oar Securities Plc +44(0) 20 7448
4400
www.coalof africa.com
About CoAL:
Coal of Africa Limited ("CoAL") is primarily focused on the acquisition,
exploration and development of thermal and metallurgical coal projects. The
Company`s key projects, along with its leading metals processing company
NiMag Group (Pty) Ltd, are in South Africa. The Company was incorporated in
Western Australia and listed in 1980. Since 2005, the Company has also
listed on both the AIM and JSE markets, allowing further growth in the
Company`s coal assets.
Resource Estimation
The information in this report that relates to exploration results is based
on information compiled by Mr John Sparrow (Member of the South African
Council of Natural Scientific Professions SACNASP) 400109/03 an independent
geological and technical consultant with 26 years experience in the Southern
African and Australian regions. Mr Sparrow has compiled a number of
competent person`s reports for various organizations for the JSE, ASX, and
TSE.
Mr Sparrow has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity
which he is undertaking to qualify as a Competent Person as defined in the
2004 Edition of the `Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves`. Mr Sparrow has reviewed the information
contained within this report and consents to the inclusion in this report of
the matters based on his information in the form and context in which it
appears.
30 July 2008
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Appendix 5B
Mining exploration entity quarterly report
Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity
Coal of Africa Limited (previously GVM Metals Limited)
ABN Quarter ended
("current quarter")
98 008 905 388 30 June 2008
Consolidated statement of cash flows
Current Year to date
Cash flows related to operating quarter (12 months)
activities $A`000 $A`000
1.1 Receipts from product sales 11,743 46,079
and related debtors
1.2 Payments for (4,681) (12,693)
(a)exploration and (95) (95)
evaluation (1,135) (41,121)
(b) development (2,040) (9,896)
(c) production
(d) administration
1.3 Dividends received
1.4 Interest and other items of 2,725 5,472
a similar nature received
1.5 Interest and other costs of (67) (215)
finance paid
1.6 Income taxes paid - (1,512)
1.7 Other
6,450 (13,981)
Net Operating Cash Flows
Cash flows related to
investing activities
1.8 Payment for purchases (2,836) (95,599)
of:(a)prospects - -
(b)equity investments (1,174) (1,918)
(c) other fixed assets
1.9 Proceeds from sale - -
of:(a)prospects - 497
(b)equity investments - -
(c)other fixed assets
1.10 Loans to other entities - -
1.11 Loans repaid by other - -
entities
1.12 Other (provide details if - (1,860)
material)
(4,010) (98,880)
Net investing cash flows
1.13 Total operating and 2,440 (112,861)
investing cash flows
(carried forward)
1.13 Total operating and 2,440 (112,861)
investing cash flows
(brought forward)
Cash flows related to
financing activities
1.14 Proceeds from issues of 198,283 315,222
shares, options, etc.(net)
-see note 7.4 below
1.15 Proceeds from sale of - -
forfeited shares
1.16 Proceeds from borrowings - -
1.17 Repayment of borrowings - -
1.18 Dividends paid - -
1.19 Other (Exchange rate (9,727) (9,727)
related movements in
foreign borrowings and
reserves)
Net financing cash flows 188,556 305,495
190,996 192,634
Net increase (decrease) in
cash held
1.20 Cash at beginning of 62,932 61,530
quarter/year to date
1.21 Exchange rate adjustments (9) (245)
to item 1.20
1.22 Cash at end of quarter 253,919 253,919
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related
entities
Current
quarter
$A`000
1.23 Aggregate amount of payments to the 156
parties included in item 1.2
1.24 Aggregate amount of loans to the -
parties included in item 1.10
1.25 Explanation necessary for an understanding of the
transactions
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which
have had a material effect on consolidated assets and
liabilities but did not involve cash flows
Issuing of 5,200,000 shares as part consideration for
acquisition of the Mooiplaats coal project and
professional fees.
2.2 Details of outlays made by other entities to
establish or increase their share in projects in
which the reporting entity has an interest
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount Amount used
available $A`000
$A`000
3.1 Loan facilities - -
3.2 Credit standby arrangements 4,570 351
Estimated cash outflows for next quarter
$A`000
4.1 Exploration and evaluation (2,500)
4.2 Development (5,000)
Total (7,500)
Reconciliation of cash
Reconciliation of cash at the end Current Previous
of the quarter (as shown in the quarter quarter
consolidated statement of cash $A`000 $A`000
flows) to the related items in
the accounts is as follows.
5.1 Cash on hand and at bank 2,310 3,612
5.2 Deposits at call 251,960 61,107
5.3 Bank overdraft (351) (1,787)
5.4 Other (provide details) - -
Total: cash at end of 253,919 62,932
quarter (item 1.22)
Changes in interests in mining tenements
Tenement Nature of Interest Interest
reference interest at at end
(note beginning of
(2)) of quarter
quarter
6.1 Interests in
mining
tenements
relinquished,
reduced or
lapsed
6.2 Interests in Increase of Wholly 70% 100%
mining the owned
tenements investment project
acquired or in the
increased Mooiplaats
project as
previously
announced.
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion
rights together with prices and dates.
Total number Number quoted Issue Amount paid up
price per per security
security (see note 3)
(see note (cents)
3)
(cents)
7.1 Preference
+securities
(description)
7.2 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through
returns of
capital, buy-
backs,
redemptions
7.3 +Ordinary 398,254,492 398,254,492
securities
7.4 Changes during
quarter
(a) Increases 5,200,000 5,200,000 A$1.60 A$1.60
through issues 60,000,000 60,000,000 GBP1.11 GBP1.11
500,000 1,055,575 GBP0.12 GBP0.12
25,500,000 25,500,000 GBP1.30 GBP1.30
(b) Decreases
through
returns of
capital, buy-
backs
7.5 +Convertible
debt
securities
(description)
7.6 Changes during
quarter
(a) Increases
through issues
(b) Decreases
through
securities
matured,
converted
7.7 Options Exercise Expiry date
(description 19,921,688 - price See Note 6
and conversion See Note
factor) 6
7.8 Issued during Exercise Expiry date
quarter price See Note 6
1,000,000 - See Note 30
600,000 - 6 September
250,000 - A$1.90 2012
A$1.25 1 May 2012
A$2.05 1 May 2012
7.9 Exercised 555,575 555,575 GBP0.54 31 May 2009
during quarter 4,250,000 4,250,000 A$0.50 30
375,000 375,000 A$1.50 September
2011
30 November
2009
7.10 Expired during Nil Nil
quarter
7.11 Debentures
(totals only)
7.12 Unsecured
notes (totals
only)
Compliance statement
1 This statement has been prepared under accounting policies which comply
with accounting standards as defined in the Corporations Act or other
standards acceptable to ASX (see note 4).
2 This statement does give a true and fair view of the matters disclosed.
Sign here: ...................................... Date: 30 July 2008
(Director)
Print name: Simon Farrell
Notes
1 The quarterly report provides a basis for informing the market how the
entity`s activities have been financed for the past quarter and the effect
on its cash position. An entity wanting to disclose additional information
is encouraged to do so, in a note or notes attached to this report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in
respect of interests in mining tenements acquired, exercised or lapsed
during the reporting period. If the entity is involved in a joint venture
agreement and there are conditions precedent which will change its
percentage interest in a mining tenement, it should disclose the change of
percentage interest and conditions precedent in the list required for items
6.1 and 6.2.
3 Issued and quoted securities: The issue price and amount paid up is
not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 1022: Accounting for
Extractive Industries and AASB 1026: Statement of Cash Flows apply to this
report.
5 Accounting Standards ASX will accept, for example, the use of
International Accounting Standards for foreign entities. If the standards
used do not address a topic, the Australian standard on that topic (if any)
must be complied with.
6 Issued options as at 30 June 2008:
Number Number Exercise Expiry Date Lapsed
Issued Quoted Price Since End
of
quarter
9,250,000 - A$0.50 30 September 2011 -
196,688 - GBP0.34 17 May 2009 -
7,000,000 - A$1.25 30 September 2012 -
1,625,000 - GBP0.65 30 November 2009 -
250,000 - A$2.05 1 May 2012 -
1,000,000 - A$1.90 30 September 2012 -
600,000 - A$1.25 1 May 2012 -
Date: 30/07/2008 10:39:02 Produced by the JSE SENS Department.
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