| Thu 23 Apr 2009, 11:41 | | CZA - Coal of Africa Limited - Report For The March 2009 Quarter |
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CZA
CZA
CZA - Coal of Africa Limited - Report For The March 2009 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`)
23 April 2009
REPORT FOR THE MARCH 2009 QUARTER
Coal of Africa Limited ("CoAL" or "the Company") announces its operational
report for the quarter ended 31 March 2009. A full copy of this report is
available at the Company`s website, www.coalofafrica.com.
Highlights
* Increased coal production from the two continuous miners and sustained
progress in the development of infrastructure at the Mooiplaats thermal
coal project ("Mooiplaats Project).
* Agreement reached with Transnet Freight Rail ("TFR") to transport 1 million
tonnes per annum ("mtpa") to the Matola dry bulk terminal in Maputo,
Mozambique ("Matola Terminal").
* Agreement to provide funding to expand the Matola Terminal, securing an
additional 2 mtpa port allocation with an anticipated completion date of 1
August 2010.
* Agreement to grant Exxaro Coal (Pty) Ltd an option to acquire up to 30% of
the Makhado hard coking coal project ("Makhado Project") for a cash
consideration equal to the Project`s NPV, less a 20% discount.
* Selection of MCC Contracts ("MCC"), a division of Eqstra Holdings Limited,
as preferred partner for the opencast mining operations at the 721 million
gross in situ tonnes (total) Vele coking coal project ("Vele Project").
* Appointment of ELB Engineering Services (Pty) Ltd ("ELB") to construct a
temporary 340 tonnes per hour ("tph") coal beneficiation plant to
facilitate coking coal production at the Company`s Vele Project from end
November 2009.
* Memorandum of Understanding signed with Dowding, Reynard and Associates
("DRA") for the process design criteria and potential construction of the
15mtpa permanent coal beneficiation plant for the Vele Project.
* Appointment of Morgan Stanley & Co. International Limited and Evolution
Securities Limited as Joint Brokers to the Company. Evolution Securities
also appointed as Nominated Advisor to CoAL.
* Agreement to acquire 50% of the shares in Guiderius Investments Limited
("Guiderius"), which holds 60% of the Massabi Coal Joint Venture ("Massabi
JV"), located in Zimbabwe.
* Establishment of Coal of Africa King Toni Mphephu Scholarship Trust which
has enabled the first intake of 32 scholars from the Vhembe district of the
Limpopo Province to study at tertiary education institutions.
* Appointment of Professor Ntshengedzeni Alfred Nevhutanda as Executive
Director of CoAL.
* Cash balance at the end of the quarter was A$122 million - the Company has
no debt.
Commenting on the results today, Simon Farrell, Managing Director of CoAL said,
"Current global conditions are challenging but the Company is in the fortunate
position of having no debt, considerable cash reserves and projects that will
supply significant quantities of coal to the market. The Mooiplaats thermal coal
project is on track to produce saleable export quality thermal coal early in the
new financial year and I am confident that production on the Vele coking coal
project will commence by the end of 2009. We have managed to remove a major
infrastructure challenge faced by bulk commodity miners in securing sufficient
port and rail allocation, guaranteeing our ability to export coal to the more
lucrative international markets."
DISCUSSION OF RESULTS
Mooiplaats Thermal Coal Project - Ermelo Coalfield (100%)
The Company is proud to announce that at the end of March 2009 it had recorded
over 400,000 fatality free and lost time incident free man-hours. Progress on
the underground and surface infrastructure continued according to schedule. The
incline conveyor belt linking the underground operations to the surface
infrastructure has been commissioned, allowing for the transport of coal to the
surface stockpile areas. Production, stockpile and auxiliary conveyor belts are
complete with the installation and commissioning of the remaining conveyor belts
due early in the next quarter. Road network construction on the project remains
on course for completion by the end of April 2009.
Development of the underground infrastructure was delayed due to the presence of
a dyke but, by the end of March, the two Continuous Miners had progressed over
150 metres yielding 16,900 tonnes of coal.
Construction of change houses, offices and workshops has commenced and is
expected to be completed by the end of April 2009, when phase one of the wash
plant is commissioned. Kwena Processing (Pty) Ltd will operate the wash plant
and Portaclone (Pty) Ltd has been appointed to construct the second phase of the
plant. The slurry dams will be constructed and operated by ECMP (Pty) Ltd.
Discussions with third parties regarding the use of their coal sidings continued
and finalisation of commercial terms are expected by the end of April.
Negotiations regarding long term off-take agreements for the export of thermal
coal, as well as the lean coal produced, are ongoing. In addition, discussions
regarding the sale of lower quality thermal coal to Eskom continued.
Vele Coking Coal Project - Tuli Coal Field (74%)
During the March quarter, specialist studies required for the Environmental
Impact Assessment and Environmental Management Plan were completed. These
specialist studies will be discussed with all Interested and Affected Parties
during April 2009 prior to submission to the Department of Minerals and Energy
("DME") as part of the New Order Mining Right ("NOMR") Application, submitted in
October 2008. The Company remains hopeful of receiving a granted New Order
Mining Right by September of this year.
The remaining 12 holes of the bulk sample drilling programme were completed in
early 2009, allowing for better definition of the proposed bulk sample box-cut
site. A full suite of geotechnical analysis as well as an incline drilling
programme commenced during the quarter. The analysis to be undertaken includes a
70 hole drilling programme that will improve the project drilling density and
resource modelling, assist in assessing underground mining roof and floor
conditions as well as identify the presence of faulting and the continuity of
the select mining horizon. CoAL will advise the market once all testing has been
completed and the results received. The incline drilling programme will improve
the data on the site identified for the extraction of the 5,000 tonne bulk
sample for analysis by ArcelorMittal and other potential customers.
The tender process for the supply of a modular plant was finalised during the
March quarter with a letter of intent sent to ELB for the construction of the
plant. ELB has partnered with PBA Projects to design and construct the modular
plant, which will be based on PBA`s processing plant designs used in the marine
diamond industry. A Memorandum of Understanding has been signed with DRA to
design, construct and operate (via Minopex) the larger, permanent Vele coking
coal wash plant. The modular wash plant will be relocated to the Makhado Project
once the larger wash plant at Vele has been commissioned.
GRD Minproc has been mandated to complete a Project Feasibility Study document
on the Vele Project, results of which are expected by August 2009. This study
will include both the underground and open cast sections of the project.
Agreements with surface rights owners 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.
MCC has been appointed as the preferred partner to conduct opencast mining
operations at the Company`s Vele coking coal project. MCC has been a leader in
the field of surface contract mining for over 25 years and has vast experience
in both hard rock and coal mining. Current contracts performed by MCC involve
the excavation of over 15 million tonnes of ore and waste rock per month.
Formalisation of the open cast mining agreements with MCC is expected to be
finalised by the end of the June 2009 quarter.
Makhado Coking Coal Project - Soutpansberg Coal Field (100%)
The Company reached agreement with Exxaro Coal (Proprietary) Limited , a wholly
owned subsidiary of Exxaro Resources Limited ("Exxaro"), whereby CoAL has
granted Exxaro an option, subject to certain conditions, to acquire up to 30% of
the Makhado Coking Coal Project for cash consideration equal to the NPV of
Project, less a 20% discount.
Importantly, Exxaro (originally part of Iscor) was responsible for all of the
historical drilling and exploration activities undertaken in the Soutpansberg
Coal Field, including Coal of Africa`s Makhado Project. Further, it is
currently the only hard coking coal producer in South Africa and the sole South
African based supplier to ArcelorMittal SA and as a result, can bring to CoAL a
depth of coking coal experience unrivalled in the South African context. Exxaro
are willing to commit their extensive resources and assist CoAL in inter alia,
the analysis of the project geology, mine planning, beneficiation and marketing
of the coal produced.
Exxaro is South Africa`s largest black-controlled, diversified mining company,
listed on the JSE Limited. Exxaro has a diverse and world-class commodity
portfolio in coal, mineral sands, base metals and industrial minerals, with
exposure to iron ore through a 20% interest in listed Kumba Iron Ore . As the
fourth-largest South African coal producer with capacity of 45 million tonnes
per annum and the third-largest global producer of mineral sands, Exxaro is a
significant participant in the coal and mineral sands markets and provides a
unique listed investment opportunity into these commodities.
A large diameter 20 hole drilling programme was completed during the quarter and
laboratory results of the core samples yielded good quality hard coking coal.
Initial logging information confirmed thicker coal zones than previously
reported and further results of laboratory analysis will be included in upgraded
resource statements.
An agreement with the surface rights owner of the farm Tanga 849 MS has been
finalised while negotiations with other Makhado Project surface right owners are
ongoing and will be finalised pending the DME`s approval of the exchange of New
Order Prospecting Rights between Rio Tinto and CoAL.
Holfontein Coal Project (100%)
The Holfontein Project is recognised as an asset available for sale. Discussions
continued with the DME regarding the NOMR Application. This Application was
submitted in early 2008 and CoAL is confident that the approval will be granted
in the near future.
Rail Allocation Secured for Coking Coal Projects
Agreement was reached with TFR, a division of Transnet, the South African
Government owned rail and freight organisation, for the rail allocation of 1
mtpa to the Matola Terminal. This rail allocation matches the Company`s port
allocation of 1 mtpa through the Matola Terminal, secured through an agreement
with Terminal De Carvao Da Matola Limitada.
During the March quarter, CoAL successfully railed over 38,000 tonnes of third
party coal to the Matola Terminal. Of the coal railed, over 22,000 tonnes were
shipped from the Terminal during the period, ensuring the viability of the rail
and port allocation while at the same time generating income from the
allocation. The Company also notes that TFR announced during the quarter a
record of 50,000 tonnes railed in one week via the Maputo corridor, further
evidence of the practical viability of this export route as an alternative to
the Richards Bay Coal Terminal.
Increase in Export Allocation at the Matola Terminal
CoAL announced earlier in the financial year that it had secured the rights to
up to 100% of any increased capacity at the Matola Terminal in return for
contributing loan funding. During the March quarter, the Company agreed to loan
the required funds for the proposed 2 mtpa expansion at the Matola Terminal
which will increase CoAL`s export allocation at the port to 3 mtpa. The
increased port capacity is expected to be effective from 1 August 2010 and
discussions with TFR to secure an additional 2 mtpa rail capacity are ongoing.
Acquisition of stake in Massabi Joint Venture
The Company has executed an agreement ("the Agreement") to acquire 50% of the
shares in Guiderius, which holds 60% of the Massabi JV located in the Massabi
Coalfield, for a consideration of US$5 million plus up to an additional US$5
million subject to certain conditions and at the discretion of CoAL. In
determining whether or not to pay the additional consideration, CoAL will
consider the level of additional risk exposure that the Company might experience
taking into account various factors, including, without limitation, the
prevailing political climate in Zimbabwe.
The Massabi Coalfield has been known since 1895, since then no further
exploration work was done until Union Carbide drilled 35 boreholes in 1975.
Union Carbide withdrew from the area in the late 1970`s due to political unrest
in Zimbabwe.
The exploration area is approximately 20km2. Massabi started conducting detailed
exploration in March 2008 and to date a total of 90 diamond drill boreholes were
drilled on a grid of 350m by 350m. A total of 7000m of diamond core was
drilled. The cores were sampled, geologically and geophysically logged. Up to
six coal bearing horizons were identified and intersected as shown in the figure
below. Samples were submitted to two coal laboratories in South Africa for
proximate analyses.
The laboratory analyses of over 500 samples of the coal seams revealed good
quality coal with coking coal properties. Floatation analysis with relative
densities of less than 1.5 g/cc of samples from selected seams yielded recovery
of over 50%; low sulphur < 1%; calorific values of >28 Mj/Kg and ash content of
< 15%.
An airborne geophysical survey was undertaken in September 2008 with an area of
approximately 60 km sq aero-magnetically surveyed at 100m line spacing using a
gradiometer magnetometer system. The aeromagnetic survey confirmed the structure
of the depositional basin and structure affecting the coal bearing seams. The
airborne data is shown in figure 6.
The exploration priority will now be to use all the recently accumulated data to
produce a robust geological model and to convert a coal resource into a reserve
using all available data and a sophisticated modelling program.
Feasibility studies are currently being done and should be completed in 6-8
months time.
Establishment of the Coal of Africa King Toni Mphephu Scholarship Trust ("the
Trust")
At the Company`s launch of its Makhado Project in 2008, it was announced that an
educational trust would be established for the benefit of scholars residing in
the vicinity of CoAL`s projects. In early 2009, the Company committed R2.5
million to the Trust, enabling 32 scholars from the area to study mining related
courses at tertiary institutions.
The Trust will be overseen by his Highness Thovhele Toni Mphephu Ramabulana,
King of the VhaVenda, VhaVenda chiefs, a senior Limpopo Education Department
employee, CoAL representatives as well as independent Trustees. Annual
contributions by the Company to the Trust are expected to increase as the
project approaches production.
Nimag Group of Companies (100%)
As a result of cost cutting and restructuring measures implemented by management
of Nimag, the Group returned a small loss for the quarter despite continued
difficult trading conditions.
Authorised by
SIMON J FARRELL
Managing Director
23 April 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 or ++44 7899 870 450
Simon Edwards/ Chris Sim
Evolution Securities
+44 0 20 7071 4300
About CoAL:
AIM and JSE listed 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.
Resource Estimation:
Resource estimations have been compiled by Mr John Sparrow (Member of the South
African Council of Natural Science Professions SACNASP) 400109/03, an
independent geological and technical consultant with 26 years experience in the
Southern African and Australian regions. Mr Sparrow has sufficient experience
relevant to the assessment of this style of mineralization to qualify as a
Competent Person as defined in the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves - the JORC Code - and
has compiled a number of Competent Person`s reports for various organizations
for the JSE, ASX and TSE. Mr Sparrow consents to the inclusion of the
information in this report in the form and context in which it appears.
www.coalofafrica.com
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Ltd
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 March 2009
Consolidated statement of cash flows
Cash flows related to operating Current Year to date
activities quarter (9 months)
$A`000 $A`000
1.1 Receipts from product sales and 4,372 8,079
related debtors
1.2 Payments for
(a) exploration and evaluation (2,866) (7,382)
(b) development (14,892) (26,493)
(c) production (9,344) (19,844)
(d) administration (5,008) (16,572)
1.3 Dividends received
1.4 Interest and other items of a 3,575 10,231
similar nature received
1.5 Interest and other costs of (58) (441)
finance paid
1.6 Income taxes paid (280) (483)
1.7 Other - -
(24,501) (52,905)
Net Operating Cash Flows
Cash flows related to investing
activities
1.8 Payment for purchases of:
(a) prospects - -
(b) equity investments (7,744) (13,935)
(c) other fixed assets (3,267) (27,036)
1.9 Proceeds from sale of:
(a) prospects - -
(b) equity investments - -
(c) other fixed assets - -
1.10 Loans to other entities (23,877) (23,877)
1.11 Loans repaid by other entities - -
1.12 Other (provide details if
material - Note 6) (19,806) (44,334)
Net investing cash flows (54,694) (109,182)
1.13 Total operating and investing (79,195) (162,087)
cash flows (carried forward)
1.13 Total operating and investing (79,195) (162,087)
cash flows (brought forward)
Cash flows related to financing
activities
1.14 Proceeds from issues of shares, - 33,451
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) - -
- 33,451
Net financing cash flows
Net increase (decrease) in cash (79,195) (128,636)
held
1.20 Cash at beginning of 202,523 252,005
quarter/year to date
1.21 Exchange rate adjustments to 28 (13)
item 1.20
1.22 Cash at end of quarter 123,356 123,356
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 parties
included in item 1.2 432
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 used
available $A`000
$A`000
3.1 Loan facilities - -
3.2 Credit standby arrangements 4,542 163
Estimated cash outflows for next quarter
$A`000
4.1 Exploration and evaluation (1,500)
4.2 Development (28,500)
Total (30,000)
Reconciliation of cash
Reconciliation of cash at the end of Current Previous
the quarter (as shown in the quarter quarter
consolidated statement of cash flows) $A`000 $A`000
to the related items in the accounts
is as follows.
5.1 Cash on hand and at bank 1,926 2,311
5.2 Deposits at call 121,593 202,363
5.3 Bank overdraft (163) (2,151)
5.4 Other (provide details) - -
Total: cash at end of quarter
(item 1.22) 123,356 202,523
Changes in interests in mining tenements
Tenement Nature of Interest Interest
reference interest at at end of
(note (2)) beginning quarter
of
quarter
6.1 Interests in
mining tenements
relinquished,
reduced or
lapsed
6.2 Interests in Tenement Nature of Interest Interest
mining tenements reference interest at at end of
acquired or (note (2)) beginning quarter
increased of
quarter
Special Acquisition - 30%
Grant of 50% of
4541 Guiderius
Investments
Limited
which holds
60% of the
Massabi
Coal Joint
Venture
("Massabi
JV") in
Zimbabwe.
Firmo (Pvt)
Ltd holds
the
remaining
40% of the
Massabi JV
and has a
share buy-
back option
to increase
its stake
to 50% of
the JV.
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 Issue Amount
number quoted price per paid up
security per
(see note security
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
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 Exercise Expiry
(description price date
and conversion See Note See Note
factor) 20,880,802 Nil 7 7
7.8 Issued during Exercise Expiry
quarter Nil Nil price date
See Note See Note
7 7
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)
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: 23 April 2009
Managing 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 The $A19,806,000 recorded in 1.12 of the cash flow comprises of
A$17,886,000 made in relation to the acquisition of surface rights for the
CoAL`s Vele and Makhado coking coal projects.
7 Issued and Quoted Options as at 31 March 2009:
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 -
Date: 23/04/2009 11:41:01 Produced by the JSE SENS Department.
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