| Mon 19 Jan 2009, 9:00 | | CZA - Coal of Africa Limited - Report for the December 2008 quarter |
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CZA
CZA
CZA - Coal of Africa Limited - Report for the December 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 DECEMBER 2008 QUARTER
Coal of Africa Limited (`CoAL` or `the Company`) is pleased to announce its
operational report for the quarter ended 31 December 2008. A full copy of this
report, as released today on the ASX, AIM and JSE, is available at the Company`s
website, www.coalofafrica.com.
Highlights
* Delivery and commissioning of the first two continuous miners at the
Mooiplaats thermal coal project ("Mooiplaats Project") with development of the
required infrastructure on schedule.
* Production of first run of mine coal at the Company`s Mooiplaats Project.
* Completion of negotiations with Transnet Freight Rail securing rail
allocation for the transport of coal from the Company`s Mooiplaats Project.
* Lodging of a New Order Mining Right ("NOMR") Application with the
Department of Minerals and Energy ("DME") for the Vele coking coal project
("Vele Project") in Limpopo.
* Revision of the Vele Project mining plan to include open cast as well as
underground sections thereby improving the coking coal yield, significantly
reducing mining costs and extending the life of the mine.
* Tenders submitted jointly with Independent Power Producers for the Eskom
base load power programme for both the Vele and Makhado coking coal projects,
were unconditionally pre-qualified.
* Extension of Black Economic Empowerment agreement to 30 April 2009 ensuring
the Company complies with South African legislative requirements for mining
companies.
* Appointment of Dr Pierre Leonard, ArcelorMittal`s nominee, as a Non-
Executive Director of CoAL.
* Cash balance at the end of the quarter of A$202 million - the Company has
no debt.
Commenting on the results today, Simon Farrell, Managing Director of CoAL, said,
"The Company`s coal projects continued to be developed according to schedule. I
am pleased to announce that coal was extracted from the Mooiplaats thermal coal
project during the quarter with further significant development of the project
due to take place in the next quarter. Despite the challenging global economic
conditions, CoAL`s cash position and the absence of debt ensures the Company
remains well placed to bring the Mooiplaats thermal coal project and the Vele
and Makhado coking coal projects into production within the next two years. "
DISCUSSION OF RESULTS
Mooiplaats Thermal Coal Project - Ermelo Coalfield (100% owned)
The development of the box-cut and surface infrastructure is progressing
according to plan despite seasonal rainfall and as per the initial schedule, the
washing plant is due to be commissioned in March 2009. During the quarter, the
Company took delivery of two continuous miners allowing for the production of
the first run of mine coal. The development of the underground mining portals
is at an advanced stage with production from these due to commence by the end of
Q1 2009 followed by the first coal sales in Q2 2009.
Stabilisation of the decline ramp floor and side walls has been completed and
over 150 metres of the incline conveyor belt structure has been installed with
commissioning on track for the next quarter.
Negotiations with Transnet Freight Rail ("TFR") for rail services for the
transport of coal to the Richards Bay dry bulk terminal are complete and the
Company has secured a five year rail agreement for the movement of coal from the
Mooiplaats Project. TFR has allocated CoAL the current empty wagons returning
from ArcelorMittal`s Vanderbijlpark steel works ensuring the Company will be
able to satisfy its initial 900,000 tonne per annum dry bulk terminal port
allocation and will allocate further wagons to enable the total targeted 3
million tonnes per annum of coal export to be handled through Richards Bay in
the event of terminal expansion plans proceeding.
Discussions are continuing with various parties regarding long term off-take
agreements for the export of thermal coal mined at Mooiplaats, together with the
short and long term lean coal production. In addition, the initial letter of
offer for the sale of lower quality thermal coal has been submitted to Eskom
with discussions thereof expected to be concluded by the time export sales
commence in Q2 2009.
Vele Coking Coal Project - Tuli Coal Field (74% owned)
The NOMR Application for the Vele Project was lodged and the Environmental
Scoping Report was submitted to the DME during the quarter. Specialist studies
for the Environmental Impact Assessment and Environmental Management Plan are
almost complete and are due to be submitted during Q1 2009. Furthermore, an
application to amend the Vele Project New Order Prospecting Right was submitted
to the DME so as to facilitate the extraction of a bulk sample of 5,000 tonnes
of coal from a box-cut for extensive testing and analysis by ArcelorMittal.
Drilling on the three bulk sample drill sites has been completed and the
washability tests on the core samples finalised with further detailed analysis
underway. The current drilling programme will better define the site of the
proposed bulk sample box-cut, with the remaining 12 holes due to be completed
early in 2009. This work, over and above improving the drilling density and
resource modelling, will assist in assessing the roof stability, presence of
faulting and continuity of the select mining horizon. CoAL will advise the
market once all testing has been completed and the results received.
During the quarter, the preliminary Vele Project mine production schedule was
revised to include both underground and open cast sections. The revised schedule
will potentially deliver significantly improved coking coal yields with
substantially reduced mining costs and an extended mine life to beyond 2040.
Negotiations with surface rights owners on the Vele Project have been finalised
allowing for the development of the required infrastructure and bulk sample box-
cut once legislative approval for the sample has been granted.
Subject to the granting of the New Order Mining Right, which was submitted to
the Department of Minerals and Energy in October of 2008, the Vele project
remains on schedule for mining to commence in the second half of 2009.
Makhado Coal Project - Soutpansberg Coal Field (100% owned)
Exploration drilling totalling over 3,400 metres was completed during the
quarter resulting in the commencement of a large diameter drilling ("LDD")
programme. The 20 hole LDD programme focused on three sites and by the end of
December, 12 holes had been completed. Results of core analysed by laboratories
yielded good quality hard coking coal and full results of this programme are
expected in Q2 2009.
The NOMR Application is almost complete and significant progress is being made
on the Environmental Scoping Report, the Environmental Impact Assessment and
Environmental Management Plan, all of which will be submitted to the DME once
Section 11 approval has been received for the Rio Tinto farm swap. Negotiations
with surface rights owners have commenced and will be finalised pending the
approval of the farm swap.
As previously announced, current planning and project progress suggests that the
Vele Project will be commissioned first, followed by the Makhado Project
approximately 12 months thereafter. Importantly, the ultimate timing of these
projects remains a function of the NOMR`s being granted.
Holfontein Coal Project (100%)
In late December, the Company agreed to terminate the agreement whereby Lachlan
Star Limited ("Lachlan Star") would acquire 100% of the Holfontein Project as
Lachlan Star failed to acquire the necessary shareholder approval. A NOMR
Application for the Holfontein Project has been submitted to the DME and CoAL
will continue to add value to the project.
Extension of BEE Agreement
The agreement with Coal Investments Limited ("CIL") whereby CIL would subscribe
for CoAL shares and be granted an option which, if exercised, would result in
CIL, African Global Capital I, L.P. ("AGC") and their affiliates holding in
excess of 26% of the Company`s shares, was extended to 30 April 2009. AGC is a
private equity initiative involving Mvelphanda Holdings (Pty) Ltd, OZ Management
LP (an operating entity of Och-Ziff Capital Management LLC (NYSE: OZM) and
Palladino Holdings Ltd.
When implemented, the agreement will ensure that CoAL is fully compliant with
South African legislation requiring black empowered groups ("BEE Groups") to
hold more than 26% of a mining company`s equity by 2014. CIL, AGC and their
affiliates agreed to use commercially reasonable endeavours to transfer their
holdings in the Company to a BEE Group by the amended date.
IPP Submissions Pre-Qualified by Eskom
Both of CoAL`s independent base load generation tenders submitted jointly with
Independent Power Producers ("IPP"), whereby the IPP will supply Eskom with base
load power, have been unconditionally pre-qualified by Eskom. Submission to
supply coal to the proposed IPP located close to the Vele Project was made
jointly with Mulilo Energy (Pty) Ltd and China Railway Construction Corporation,
and with AES Energy Developments for an IPP in the proximity of the Makhado
coking coal project. In both cases the coal supplied would be a "middlings"
product, a lower quality coal produced additional to the coking coal. The
economics of the Vele and Makhado coking coal projects are not reliant on the
sale of the middlings fraction but if successful, this would provide substantial
upside to the projects.
Nimag Group of Companies (100%)
Where possible, costs have been reduced as the Nimag Group continues to
experience difficult trading conditions due to the depressed global conditions.
The Nimag Group is considered a non-core asset and CoAL continues to review all
its strategic options in relation to this asset.
Authorised by
Simon Farrell
Managing Director
19 January 2009
For more information contact:
Simon Farrell, Managing Director
CZA
+61 417 985 383 or +61 8 9322 6776
Jos Simson / Gareth Tredway
Conduit PR
+44 0 20 7429 6603
Simon Edwards/ Chris Sim
Evolution Securities
+44 0 20 7071 4300
About CoAL:
Coal of Africa Limited ("CoAL") is primarily focused on the acquisition,
exploration and development of metallurgical and thermal 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.
www.coalofafrica.com
Rule 5.3
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
ABN Quarter ended
("current quarter")
98 008 905 388 31 December 2008
Consolidated statement of cash flows
Current Year to
Cash flows related to operating quarter date
activities $A`000 (6 months)
$A`000
1.1 Receipts from product sales 1,787 3,708
and related debtors
1.2 Payments for
(a)exploration and evaluation (2,282) (4,516)
(b) development (7,891) (12,051)
(c) production (4,942) (10,500)
(d) administration (4,923) (11,499)
1.3 Dividends received
1.4 Interest and other items of a 4,735 6,837
similar nature received
1.5 Interest and other costs of (180) (383)
finance paid
1.6 Income taxes paid - -
1.7 Other
Net Operating Cash Flows (13,695) (28,404)
Cash flows related to
investing activities
1.8 Payment for purchases of:
(a)prospects - -
(b)equity investments - (6,191)
(c) other fixed assets (22,396) (25,001)
1.9 Proceeds from sale of:
(a)prospects - -
(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 - (23,296)
material - Note 6)
Net investing cash flows (22,396) (54,488)
1.13 Total operating and investing (36,091) (82,892)
cash flows (carried forward)
1.13 Total operating and investing (36,091) (82,892)
cash flows (brought forward)
Cash flows related to
financing activities
1.14 Proceeds from issues of - 33,451
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 related - -
movements in foreign
borrowings and reserves)
Net financing cash flows - 33,451
Net increase (decrease) in (36,091) (49,441)
cash held
1.20 Cash at beginning of 238,543 252,005
quarter/year to date
1.21 Exchange rate adjustments to 71 (41)
item 1.20
1.22 Cash at end of quarter 202,523 202,523
+ See chapter 19 for defined terms
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 662
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
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
available used
$A`000 $A`000
3.1 Loan facilities - -
3.2 Credit standby arrangements 4,637 2,151
Estimated cash outflows for next quarter
$A`000
4.1 Exploration and evaluation (1,500)
4.2 Development (45,000)
Total (46,500)
Reconciliation of cash
Reconciliation of cash at the end of Current Previous
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 2,311 3,902
5.2 Deposits at call 202,363 236,924
5.3 Bank overdraft (2,151) (2,283)
5.4 Other (provide details) - -
Total: cash at end of quarter 202,523 238,543
(item 1.22)
Changes in interests in mining tenements
Tenement Nature of Interest Interest
reference interest at at end of
(note beginning quarter
(2)) of
quarter
6.1 Interests in
mining
tenements
relinquished,
reduced or
lapsed
6.2 Interests in Tenement Nature of Interest Interest
mining reference interest at at end of
tenements (note beginning quarter
acquired or (2)) of
increased quarter
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
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 securities 411,375,378 411,375,378
7.4 Changes during quarter
(a) Increases through issues
(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 (description and
conversion factor) 20,880,802 Nil
7.8 Issued during quarter 1,650,000 Nil
7.9 Exercised during quarter Nil Nil
7.10 Expired during quarter Nil Nil
7.11 Debentures
(totals only)
7.12 Unsecured notes (totals only)
Issued and quoted securities at end of current quarter
(Continued)
Issue price Amount paid
per up per
security security
(see note (see note
3) 3)
(cents) (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 securities
7.4 Changes during quarter
(a) Increases through issues
(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 (description and Exercise Expiry date
conversion factor) price See Note 7
See Note 7
7.8 Issued during quarter Exercise Expiry date
price See Note 7
See Note 7
7.9 Exercised during quarter
7.10 Expired during 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: (Director) Date: 19 January 2009
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 The $A26,123,000 recorded in 1.12 of the cash flow reflects cash paid in
relation to logistics development for CoAL`s Makhado and Vele projects. These
payments are deposits for port allocation for the export of coal from the Maputo
terminal in Mozambique.
7 Issued and Quoted Options as at 31 December 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
934,114 - 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 -
1,650,000 - A$3.25 31 July 2010 -
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
Date: 19/01/2009 09:00:01 Produced by the JSE SENS Department.
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