| Mon 6 Feb 2012, 7:20 | | CZA - Coal of Africa Limited - Coal of Africa Announces BEE ownership |
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CZA
CZA
CZA - Coal of Africa Limited - Coal of Africa Announces BEE ownership
structure for Chapudi Project
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")
COAL OF AFRICA ANNOUNCES BEE OWNERSHIP STRUCTURE FOR CHAPUDI PROJECT
"Broad-based transaction includes local communities"
Coal of Africa Limited ("CoAL" or "the Company") is pleased to advise that it
has entered into definitive agreements with Rothe Investment Proprietary
Limited ("Rothe"), a newly established company owned by Terracotta Processing
(Pty) Ltd (reg. no. 2009/016422/07) ("Terracotta") and Vibrant Veterans
Minerals Resources (Pty) Ltd (Reg. no. 2007/013039/07) ("Vibrant Veterans"),
both Black Economic Empowerment ("BEE") companies, and King Makhado Holdings
(Pty) Limited, (reg. No. 2009/016422/07) ("King Makhado") a company
representing all the local communities in close proximity to the project,
("the Communities"), to acquire a 26% shareholding in the wholly-owned CoAL
subsidiary, Keynote Trading & Investment 108 Proprietary Limited ("Keynote").
Keynote is expected to hold the Chapudi Coal Project and related exploration
properties (collectively, the "Chapudi Coal Project") upon completion of its
acquisition from Rio Tinto Minerals Development Limited and Kwezi Mining
Proprietary Limited (the "Vendors").
Terracotta and Vibrant Veterans each own 30% of the entire issued share
capital of Rothe with the remaining 40% being held by King Makhado. The
directors of Rothe are Tirhan Joseph Mathebula, Vhutshilo Theopilos Muthurana
and Mashudu Ramano.
In line with CoAL`s strategy, the transaction with Rothe is aligned with the
requirements of the Mining Charter and the Minerals Resource and Petroleum
Development Act ("MPRDA"), to ensure that participation through a wider
grouping of stakeholders in terms of the principles of Broad-Based Black
Economic Empowerment is achieved and that historically disadvantaged South
Africans hold 26% of the issued shares in Keynote, which is a legislated
requirement for 2014. The conclusion of this transaction at an operational
level ensures closer alignment with important stakeholders, including the
communities that live in the immediate proximity of the project area, and
avoids any dilution typical of a BEE shareholding held at the parent company
level.
The Company`s Chief Executive Officer, Mr John Wallington, commented: "We are
very pleased to have made further progress towards the development of our
asset portfolio in the Limpopo region. We recognise that the development of
our projects needs to generate real and meaningful benefits for the local
communities, the local economy and socio-economic transformation in general.
We welcome our new partners in the transaction and look forward to working
with them and the communities in the development of the various projects in
the years to come."
Speaking on behalf of Rothe, Mr Mashudu Ramano, said: "We are delighted to be
working with Coal of Africa in the Limpopo Province and look forward to
developing our project whilst being mindful of our commitment to environmental
and resource stewardship, economic and social responsibilities and, more
importantly, that we mine with the consent of the public and the communities
in which we will be operating."
Background
On 26 November 2010, CoAL confirmed the conclusion of a Sale and Purchase
Agreement for the acquisition of the Chapudi Coal Project from joint venture
companies held by the Vendors for US$75 million.
At the time of entering into the Sale and Purchase Agreement, CoAL confirmed
that it intended to use the acquisition to continue and further build upon its
broad based BEE partnerships at the operational level. Specifically, CoAL
noted that it planned to develop the Chapudi Coal Project and potential
independent power producer arrangements in collaboration with its proposed BEE
partners, the local constituents of the Communities, together with Terracotta
and Vibrant Veterans.
Completion of the Chapudi Coal Project acquisition remains subject to the
fulfillment of the conditions precedent by 30 April 2012, including section 11
approval of the transfer in terms of the MPRDA and South African Reserve Bank
exchange control approval for, inter alia, payment of the purchase price. The
application for the section 11 approval is required to be supplemented by
Keynote`s BEE credentials which can now occur following the signature of the
agreements with Rothe. CoAL is required to arrange for the Vendors to be
released from their guarantees in relation to existing rehabilitation
guarantees posted as part of the original prospecting rights and related
exploration program. The replacement guarantees, to be established on an
insurance guarantee basis, are in the process of being finalised and will only
be implemented when the section 11 approval is granted.
Chapudi comprises both thermal and coking coal development projects and the
acquisition of the Chapudi Coal Project provides CoAL with an additional
estimated 1,040Mt JORC resource (of which 90Mt is Measured, 220Mt Indicated
and 730Mt Inferred, as defined in the 2004 Edition of the `Australasian Code
for Reporting of Exploration Results, Minerals Resources and Ore Reserves`
("JORC Code")), which is contiguous with its Makhado Coking Coal Project
("Makhado Project").
Transaction Structures
The Company has entered into a Subscription Agreement with Rothe and Keynote
pursuant to which Rothe and the Company will subscribe for shares in Keynote
such that following implementation thereof, Rothe will hold 26% of the
ordinary shares in Keynote. The subscription is at par value as Keynote does
not currently hold the Chapudi Coal Project.
The Company, Keynote and Rothe have also entered into a Shareholders Agreement
to regulate their relationship. The material terms of the Shareholders
Agreement are set out in Annexure A.
CoAL bears the funding risk for the acquisition of the Chapudi Coal Project
from the Vendors for US$75 million and the initial costs up to bankable
feasibility study on the Chapudi Coal Project. Such funding will be advanced
by CoAL on an interest free basis for an initial three year period.
Thereafter, this amount bears interest at the publicly quoted prime rate of
interest levied by The Standard Bank of South Africa Limited from time to
time. Any other amounts loaned to Keynote by the Company for other projects
undertaken by Keynote, shall be interest bearing.
Upon successful completion of the bankable feasibility study, Rothe will
undertake to fund its pro rata portion of the funding costs and acquisition
cost of US$75 million (such portion being twenty six percent thereof) at its
face value from CoAL and will be required to arrange financing for its pro-
rata portion of the Chapudi Coal Project, post bankable feasibility, either
through equity or debt (which would be on a project basis with CoAL). The
loans will be repaid as and when Keynote has available funds and shall rank
behind funding from external third parties and post bankable feasibility
loans. Should Rothe be unable to raise the necessary financing, the
Shareholders Agreement will facilitate the introduction of a new BEE
shareholder/s in Keynote.
Authorised by
SHANNON COATES
Company Secretary
6 February 2012
Johannesburg
JSE Sponsor
J.P. Morgan Equities Limited
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
Ruben Govender
JSE Sponsor
J.P. Morgan Equities Limited
+27 11 507 0430
Charmane Russell/James Duncan
Financial PR (South Africa)
Russell & Associates
+27 11 880 3924
+27 82 372 5816
About CoAL:
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.
ANNEXURE A
Material terms of Shareholders Agreement
Condition precedent: The provisions of the Shareholders Agreement are subject
to the simultaneous execution of the Subscription Agreement.
Appointment of Directors: CoAL has the right to appoint a director for each
15% of the issued share capital held by it and Rothe has the right to appoint
3 directors for every 26% of the issued share capital held by it, or 1
director for every completed 7 percent if its holding falls below 26% provided
that Keynote is not in breach of the Empowerment Criteria.
BEE status: Rothe is to retain its BEE status for so long as Empowerment
Criteria are applied by the DMR and in the event of a default CoAL can call on
Rothe`s share at fair market value as agreed or as determined by an
independent expert on the basis as set out in the Shareholders Agreement.
Chairman: The first chairman will be appointed for a period of one year and
thereafter there will be an annual rotation.
Financing:
CoAL undertakes to finance the Chapudi Acquisition costs of US$75 million and
the pre-feasibility cost which shall be credited as a loan account from CoAL
to Keynote ("the Initial Costs"). The loan portion which relates to the
Chapudi Project only shall not attract interest for the first 3 year period
(being the time period that it is estimated may be required to get to bankable
feasibility).
On bankable feasibility, CoAL shall dispose of 26% of the Initial Costs to
Rothe at its face value. Rothe will then have a claim against Keynote for 26%
of the Initial Costs ("the Rothe claim") and a corresponding obligation to
CoAL for the acquisition of the claim. CoAL`s loan account vis-a-vis Keynote
will be for 76% of the Initial Costs ("the Coal claim"). The Rothe claim, the
CoAL claim and CoAL`s claim against Rothe for the acquisition of its portion
of the Initial Costs, will all be interest bearing. Rothe is obliged to
settle CoAL when Keynote settles it.
After bankable feasibility, Keynote will endeavour to find third party
funding. If funding cannot be raised, externally, the shareholders are
required to fund pro rata to their shareholding.
The shareholder loans are repaid after all third party funding has been repaid
and after the post bankable feasibility loans have been repaid.
Dividend Policy: the Shareholders Agreement provides that dividends are only
payable once the loans to Shareholders have been repaid in full and having
regard to the Company`s cash requirements. The policy shall be agreed
unanimously by CoAL and Rothe. In the event that agreement cannot be reached,
the Auditors shall determine same acting as an expert.
The Shareholders Agreement contains other provisions common for these types of
agreements.
Date: 06/02/2012 07:20:02 Produced by the JSE SENS Department.
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