| Tue 1 Nov 2011, 7:06 | | CZA - Coal of Africa Limited - Report for the quarter ended 30 September 2011 |
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CZA
CZA
CZA - Coal of Africa Limited - Report for the quarter ended 30 September 2011
Coal of Africa Limited
(Incorporated and registered in Australia)
(Registration number ABN 008 905 388)
ISIN AU000000CZA6
JSE/ASX/AIM share code: CZA
("CoAL or the "Company" or the "Group")
REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2011
"Significant progress made", says CoAL CEO
CoAL provides its operational report for the quarter ended 30 September 2011.
A copy of this report is available on the Company`s website,
www.coalofafrica.com.
Highlights
- Environmental Authorisation ("EA") for the Vele coking coal colliery
("Vele Colliery") granted on 5 July 2010, enabling the Company to
recommence limited construction and mining activities from 4 August
2011.
- Suspension of the Vele Colliery Integrated Water Use Licence ("IWUL")
lifted by the South African Minister of Water and Environmental Affairs
("the Minister") and full operations commenced on 19 October 2011.
- Memorandum of Agreement ("MoA") signed with the South African Department
of Environmental Affairs ("DEA") and South African National Parks
("SANParks") and seeks to ensure the conservation and integrity of the
globally significant natural and cultural heritage site and to maintain
and strengthen co-operation between the parties.
- 1,199,902 tonnes (FY2011 Q4: 1,256,825 tonnes) of run of mine ("ROM")
and 652,060 tonnes (FY2011 Q4: 664,865 tonnes) of export quality coal
produced at the Woestalleen thermal coal complex ("Woestalleen") and the
Mooiplaats thermal colliery ("Mooiplaats").
- Sales of export coal decreased from 492,781 tonnes in the June 2011
quarter to 277,499 tonnes in the September 2011 quarter due to generally
slower market conditions and the timing of deliveries over the quarter
end. Sales are scheduled to return to normal levels in the December
quarter.
- Improved yield and production at Mooiplaats together with the change
from a contract mining to an owner-managed operation.
- Commissioning the fifth underground section at Mooiplaats during
September 2011.
- Irrevocable undertakings signed by vendor shareholders and the time
period to obtain regulatory approvals extended in the acquisition of the
Chapudi Coal Project from Rio Tinto Minerals Development Limited ("Rio
Tinto") and Kwezi Mining (Proprietary) Limited ("Kwezi").
- Full Mineral Experts Report published today within a Registration
Document, also including information on the Group, its assets and
projects and regulatory, operating and financial information.
- Total cash balance and available facilities as at 30 September 2011 of
US$28.9 million.
Commenting today, Mr John Wallington, Chief Executive Officer of CoAL said:
"Steady progress has been made by Coal of Africa, not least of which was the
lifting of the suspension on the IWUL at Vele allowing the resumption of
operations to bring the mine into production. The signing of the MoA with the
DEA and SANParks signified a further strengthening of our working
relationship with government and our commitment to all our stakeholders.
Importantly, teams are back on site and the process of re-employing people
has commenced. During the initial phase of mining operations, the mine is
planned to ramp up to 2.7Mtpa ROM coal and 1.0Mtpa saleable coal and create
up to 500 jobs.
During the September quarter, the transition of Mooiplaats from a contract
mining to an owner managed operation progressed satisfactorily. Quarter on
quarter, the colliery reported a 29% increase in run of mine coal production
and a 3% increase in overall yield. The commissioning of a fifth underground
section during September 2011 will facilitate further increases in production
and optimise the installed processing plant capacity at the colliery. During
the quarter, Woestalleen performed in line with expectation with the Vuna
Colliery extending its exemplary safety record with no lost time injuries
recorded."
QUARTERLY COMMENTARY
Woestalleen Complex - Witbank Coalfield (100%)
The Woestalleen Complex consisting of the Vuna Colliery ("Vuna") and three
beneficiation plants continued the outstanding safety record with no single
lost time injury recorded since commencing operations in 2008. Regrettably,
two lost time injuries were recorded at the Woestalleen processing plant
during the quarter, and management continues to focus on safety as a critical
area of the business.
In the September quarter, production at Woestalleen was from Vuna only due to
the depletion of Hartogshoop in the previous quarter. Total ROM production
for the quarter of 898,114 tonnes, was 7.4% lower than the June quarter of
970,220 tonnes.
The Woestalleen wash plants produced 470,482 tonnes (FY2011 Q4: 503,625
tonnes) of export quality coal and a further 108,648 tonnes (FY2011 Q4:
73,265 tonnes) of lower grade product for Eskom Limited ("Eskom"), the South
African electricity utility.
The overall yield of 63.4% (FY2011 Q4: 64.5%) was marginally lower than the
previous quarter due to the change in mix with the Vuna providing 100% of the
feed to the plant as mentioned above.
Mooiplaats Colliery - Ermelo Coalfield (100%)
The transition to an owner managed mine at the end of June 2011 facilitated
direct management of the operation, following which there has been an
improvement in overall performance. Coal production increased by 28.6% to
301,788 ROM tonnes from 234,655 ROM tonnes in the June quarter (excluding
51,950 of ROM waste tonnes). A fifth underground section was commissioned in
September 2011 and is expected to reach optimum production during the second
quarter of the current financial year.
Coal processed during the three months to September 2011 declined marginally
to 317,709 ROM tonnes from 321,105 ROM tonnes during the June quarter. A
total of 181,578 tonnes (FY2011 Q4: 161,240 tonnes) of export quality coal
was produced and 32,420 tonnes (FY2011 Q4: 44,348 tonnes) of the lower grade
product for Eskom.
Reduction in ROM contamination due to better mining controls resulted in
yields improving from 64.0% in the June quarter to 67.4% in the September
quarter.
Safety at Mooiplaats continues to be a focus area with three lost time
injuries reported at the mine during the September quarter (FY2011 Q4: four
lost time injuries).
Marketing and Logistics
The slower international market for export thermal coal resulted in delays in
shipments under term agreements for planned shipments during the quarter.
Operational delays at the terminal at quarter end resulted in the loading of
a vessel being delayed into the December quarter. These factors resulted in
stock at the Matola Terminal increasing to 220,000 tonnes at 30 September
2011. Subsequently, shipping levels have returned to normal levels, with
additional cargoes scheduled in the December quarter and stock levels
expected to normalise by calendar year end.
A total of 64,399 tonnes of third party coal (FY2011 Q4: 40,298 tonnes) was
purchased during the quarter, contributing to the 277,499 tonnes of export
quality coal sold (FY2011 Q4: 492,781 tonnes).
Woestalleen sold 276,171 tonnes (FY2011 Q4: 264,813 tonnes) and Mooiplaats
41,254 tonnes of coal (FY2011 Q4: 63,233 tonnes) to domestic customers during
the quarter and 90,344 tonnes (FY2011 Q4: 39,460) of middlings coal from
Woestalleen and 30,838 tonnes (FY2011 Q4: 69,242 tonnes) from Mooiplaats, was
purchased by Eskom.
Summary tables (tonnes)
Woestalleen Mooiplaats Total
September 2011 quarter
ROM production 898,114 301,788 1,199,902
ROM coal purchased - - -
Total coal processed 913,896 317,709 1,231,605
Overall Yield 63.4% 67.4% 64.4%
Total coal produced 579,130 213,998 793,128
Export coal 470,482 181,578 652,060
Middlings coal 108,648 32,420 141,068
Saleable coal purchased - 64,399 64,399
Total coal sales 366,515 349,591 716,106
Export - 277,499 277,499
Inland 276,171 41,254 317,425
Eskom 90,344 30,838 121,182
Vele Colliery
During the quarter, significant progress was made on various regulatory
matters impacting the Vele Colliery. Following receipt of the EA for Vele on
5 July 2011, and the subsequent appeal against the granting of the IWUL
resulting in the suspension of the IWUL by operation of law, limited
operations not requiring the use of water commenced on 4 August 2011. These
activities included grading all access roads onto site, undertaking all
electrical repairs and construction at the coal handling and processing
plant.
On 8 August 2011, CoAL lodged an urgent petition requesting the Minister, in
terms of the National Water Act No 36 of 1998 ("the Act"), to exercise her
discretion to allow the IWUL to remain in full force and effect pending the
appeal to be heard by the Water Tribunal. After taking into consideration all
relevant facts including the appeal to the Water Tribunal, in terms of
Section 148 (2)(b) of the Act the Minister lifted the suspension on 18
October 2011.
All activities required to complete construction of the mine and plant and to
commence full mining operations at Vele, resumed on 19 October 2011.
During the September quarter, the Company, DEA and SANParks unveiled a
historical MoA in respect to the Mapungubwe Cultural Landscape World Heritage
Site ("Heritage Site"). The MoA was concluded pursuant to conditions set out
as part of the EA and seeks to ensure the conservation and integrity of the
globally significant natural and cultural Heritage Site and to maintain and
strengthen co-operation between CoAL, SANParks and the DEA.
The signatories to the MOA have committed themselves to ten joint
undertakings, including:
- developing means by which local communities and other stakeholders can
participate in and tangibly benefit from the management and sustainable
use of the Heritage Site`s natural and cultural resources;
- developing detailed biodiversity offset programs and action plans;
- monitoring the implementation of these through a steering or
environmental management committee; and
- providing adequate financial, human and other resources for their
effective implementation.
The additional Heritage Impact Assessment as required by the United Nations
Educational Scientific and Cultural Organization (UNESCO) and the DEA
commenced during the quarter and is expected to be completed during the
quarter ending 31 December 2011.
Makhado Coking Coal Project
During the September quarter, independent experts continued with the baseline
social and environmental studies required for the Makhado Project New Order
Mining Right ("NOMR") application. The consultation process with interested
and affected parties continued during the period, including the involvement
of various government departments.
The Definitive Feasibility Study ("DFS") is in the final stages of review
with all phases of design work and reports complete. Discussions to finalise
an off-take agreement with ArcelorMittal South Africa Limited are underway
and is expected to be concluded in the near term, following which all project
documents will be tabled for approval by the CoAL Board. Feedback from other
potential customers who have received product samples is expected during the
next quarter.
By 30 September 2011, comments from the various interested and affected
parties on the Environmental Impact Assessment, Environmental Management
Plans and IWUL submissions, had been received. The IWUL Technical and
Engineering report is expected to be submitted to the DEA during the December
quarter.
Acquisition of Rio Tinto`s South African Assets
During the September quarter, the Company secured irrevocable undertakings
from the vendor shareholders in terms of the Sale and Purchase Agreement
("SPA") for the acquisition of Rio Tinto`s Chapudi Coal Project and related
exploration properties (collectively, the "Coal Assets") in South Africa`s
Soutpansberg Coalfield in the Limpopo Province. The date for the fulfilment
of the suspensive conditions in the SPA has been extended from 12 August 2011
to 30 April 2012, to allow for obtaining the remaining regulatory approvals
required, including Ministerial consent in terms of section 11 of the Mineral
and Petroleum Resources Development Act, for the acquisition of the Coal
Assets.
The Company is in the process of mobilising the exploration teams and
finalizing the exploration programme for the various properties, which is
expected to further increase the resource base and unlock the potential value
from these assets.
The transaction consolidates various tenements and will make CoAL a
substantial holder of coking coal New Order Prospecting Rights in the
Soutpansberg Coalfield when completed.
Cash and Available Facilities
At 30 September 2011, total cash on hand and call deposits was US$8.8 million
(FY2011 Q4: US$22.8 million) and undrawn loan facilities and standby credit
arrangements was US$20.1 million (FY2011 Q4: US$17.5 million). Quarter on
quarter, total cash and available facilities remained in line with management
expectations.
As noted in the Group`s financial statements for the 2011 Financial Year
published on 19 September 2011, the Group has a continuing need for further
capital for the exploration, development and continuing operation of its
projects, including completion of the Chapudi acquisition from Rio
Tinto/Kwezi. The Directors are pursuing a number of sources of funding and
are at an advanced stage of negotiation for a new US$40 million debt facility
and remain confident of securing further financing. The Group is committed to
the sale of certain of its assets, including NiMag and the Holfontein
Project. The Directors are confident of completing the sale on one or both of
these assets within the next 12 months, realising further cash resources for
the Group.
Corporate Activity
As previously announced, the Group is committed to moving from its current
AIM listing to the Main Market of the London Stock Exchange and, in
connection with that and as a result of the Company being deemed to be tax
resident in South Africa notwithstanding its incorporation in Australia, the
Group is also proposing to carry out a restructuring of the Group in the next
12 months.
In connection with these proposed activities, the Group has today published a
Registration Document prepared in accordance with the Prospectus Rules
published by the United Kingdom Financial Services Authority ("FSA") made
under section 73A of the United Kingdom Financial Services and Markets Act
(2000) ("FSMA"), which also includes an overview of the proposed Group
restructuring. The Registration Document which has been approved by the FSA
in accordance with Section 87A of the FSMA and contains a full Mineral
Experts Report prepared by Venmyn Rand (Pty) Ltd, which includes details of
all the Group`s current projects and the revised resources and reserves
estimates set out in the Independent Technical Statement released by the
Company as part of the technical update on 18 September 2011.
In addition, the Registration Document includes a detailed description of the
Group, its directors, and its projects and licences as well as the regulatory
environment in which it operates in South Africa, including Black Economic
Empowerment. The Registration Document also sets out the material risks which
face the Group, operating and financial information on the Group for the
three years ended 30 June 2009, 2010 and 2011 reported under International
Financial Reporting Standards (as adopted by the European Union) and its
future funding requirements. The Registration Document and Mineral Experts
Report are available on the company`s website www.coalofafrica.com.
Authorised by
JOHN WALLINGTON
Chief Executive Officer
31 October 2011
1 November 2011
Johannesburg
JSE Sponsor
Macquarie First South Capital (Pty) Ltd
For more information contact:
John Wallington
Chief Executive Officer
Coal of Africa
+27 11 575 4363
Wayne Koonin
Financial Director
Coal of Africa
+27 11 575 4363
Shannon Coates
Company Secretary
Coal of Africa
+61 893 226 776
Chris Sim/Romil Patel/Jeremy Ellis
Nominated Adviser
Evolution Securities
+44 20 7071 4300
Jos Simson/Emily Fenton
Financial PR (United Kingdom)
Tavistock
+44 207 920 3150
Melanie de Nysschen/ Annerie Britz/
Yvette Labuschagne
JSE Sponsor
Macquarie
+27 11 583 2000
Charmane Russell/James Duncan
Financial PR (South Africa)
Russell & Associates
+27 11 880 3924
+27 82 372 5816
About CoAL:
CoAL is an AIM/ASX/JSE listed coal exploration, development and mining
company operating in South Africa. CoAL`s key projects include the Vele
Colliery (coking and thermal coal), the Makhado Project (coking coal) and the
Mooiplaats and Woestalleen Collieries (both thermal coal).
The Mooiplaats Colliery commenced production in 2008 and is currently ramping
up to produce 2 Mtpa. The Woestalleen Colliery, acquired through the
acquisition of NuCoal Mining (Pty) Limited in January 2010, currently
processes approximately 2.5Mtpa of saleable coal for domestic and export
markets. The Woestalleen Complex also incorporates three beneficiation plants
with a total processing capacity of 350,000 run of mine feed tonnes per
month.
CoAL`s Vele Colliery is expected to start production in Q1 2012. During the
initial phase, the operation is targeting 2.7 Mtpa ROM production to produce
1.0Mtpa of saleable coking coal. The Makhado Project, CoAL`s flagship project
in the Soutpansberg coalfield, is well into the feasibility stage, with a
Definitive Feasibility Study nearing completion. An application for a New
Order Mining Right for the Makhado Project was submitted in January 2011.
In November 2010, CoAL agreed to acquire the Chapudi coal project and several
other coal exploration properties in the Soutpansberg coal basin in South
Africa from the previous owners, including Rio Tinto. Upon completion, the
acquisition of these projects will significantly extend the scale and scope
of certain of CoAL`s existing projects in the region and will more than
double the resource of the existing Makhado Project.
Date: 01/11/2011 07:05:59 Produced by the JSE SENS Department.
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