| Wed 4 May 2011, 10:16 | | OPT - Optimum Coal Holdings Limited - Acquisition of prospecting rights |
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OPT
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OPT - Optimum Coal Holdings Limited - Acquisition of prospecting rights
Optimum Coal Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/007799/06)
JSE code: OPT
ISIN: ZAE000144663
("Optimum Coal" or the "Company")
OPTIMUM COAL - ACQUISITION OF PROSPECTING RIGHTS
Optimum Coal, a leading South African coal mining and exploration group,
listed on the JSE Limited, wishes to inform shareholders and update the market
about its acquisition of two prospecting rights in close proximity to
Koornfontein Mines.
Optimum Coal has concluded an agreement 21 April 2011 with Umcebo Mining (Pty)
Ltd to acquire two prospecting rights ("the TNC Prospecting Rights") for a
cash consideration of R420 million ("the transaction"). This agreement is
subject only to regulatory consents from the Department of Mineral Resources
for the renewal and transfer of ownership of the TNC Prospecting Rights to
Optimum Coal. The effective date of the transaction will be upon the
fulfilment of these conditions precedent (expected to occur no later than 15
November 2011).
The TNC Prospecting Rights are located approximately 10km from Koornfontein
Mines and have an in-situ coal resource of some 120 million tons of thermal
coal, of which the Company believes over 35 million tons are extractable as
run-of-mine tonnage.
In order to maximise the value of the resource, the Company plans to construct
an overland conveyor from the TNC Prospecting Rights area to Koornfontein
Mines, utilising Koornfontein`s processing plants to wash the coal and its
rapid load-out infrastructure to load trains efficiently.
The TNC Prospecting Rights area will likely be mined by opencast methods, and
is expected to be developed for first coal in FY2015.
Koornfontein Mines` current high value export life of mine from the Gloria 2
seam is some 4,5 years, and the development of the TNC Prospecting Rights
resource will enable Koornfontein to continue to produce high value saleable
export coal for an additional period of 12 years at the current 1,5 million
ton per annum rate. Additionally, over and above the export product, this
resource is expected to yield some 500 000 tons per annum of thermal coal
within Eskom quality specifications.
The purchase consideration is to be funded from Optimum Coal`s cash reserves.
The transaction will result in no change to the net asset value of the
Company, as Optimum Coal is acquiring mineral right assets for an equivalent
cash consideration and further no change in the earnings or headline earnings
per share.
CEO Mike Teke said "We have targeted these reserves for some time and are
delighted to have entered into this transaction. The TNC Prospecting Rights
will provide us with a critical, high value export life extension at
Koornfontein Mines, thereby unlocking the currently underutilised
infrastructure and maximising value for the 1,5 million tons per annum RBCT
entitlement owned by Koornfontein Mines. Additionally, we now have more
flexibility to explore options to potentially provide the lower quality 4 seam
coal at Koornfontein Mines to Eskom and we will continue to work on developing
these opportunities."
Johannesburg
4 May 2011
For further enquiries please contact:
Optimum Coal Tel: +27 (0)11 325 0403
College Hill
Jacques de Bie
Sharon Steyn Tel: +27 (0)11 447 3030
Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)
Date: 04/05/2011 10:16:01 Produced by the JSE SENS Department.
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