| Mon 18 Jun 2012, 8:56 | | CZA - Coal of Africa Limited - Coal of Africa and Exxaro Coal continue |
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CZA
CZA
CZA - Coal of Africa Limited - Coal of Africa and Exxaro Coal continue
negotiations and agree a date of 30 September 2012 for valuation of the Makhado
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 AND EXXARO COAL CONTINUE NEGOTIATIONS AND AGREE A DATE OF 30
SEPTEMBER 2012 FOR VALUATION OF THE MAKHADO PROJECT
CoAL and Exxaro target completion of further studies and conclude negotiations
by 30 September 2012
Coal of Africa Limited ("CoAL" or the "Company") and Exxaro Coal Proprietary
Limited ("Exxaro") are pleased to announce that, subsequent to the initial
review of the draft Definitive Feasibility Study ("DFS") for the Makhado Project
by Exxaro, the Parties have agreed to continue negotiations and the assessment
process to finalize the valuation of the Makhado Project, and that the deadline
for a formal decision regarding the exercise of Exxaro`s right to a 30% equity
participation in the Makhado Project ("the Option") shall now be 30 September
2012. During this period, further detailed analysis of several key aspects of
the Makhado Project will be conducted, in order to finalize the project
valuation.
Coal of Africa chief executive, John Wallington said today, "We are pleased with
the significant progress achieved to date in the discussions and negotiations
with Exxaro. The decision for Exxaro to continue with this process is
encouraging and will enable both parties jointly to complete the remaining work
required to finalize the review of the Definitive Feasibility Study and
valuation of the Makhado Project. Against the background of the detailed testing
results that confirmed the ability to produce a hard coking coal product and the
recently announced consolidation of the New Order Prospecting Rights ("NOPRs")
over the adjacent tenements acquired in the Soutpansberg coalfield, this bodes
well for the future development of the Makhado Project."
Exxaro chief executive Sipho Nkosi commented today "The development of high
quality metallurgical coal assets is fully in line with Exxaro`s strategic
growth objectives. During the past number of months we have established an
excellent working relationship with Coal of Africa and look forward to the joint
effort to finalise the review of the Makhado Project and the negotiations for
Exxaro`s possible participation in the Project."
Highlights
CoAL and Exxaro have agreed on the deliverables for the next phase of the
evaluation process, which includes further detailed analysis of several key
aspects of the Makhado Project. The mandate for the joint technical teams and
the scope of work has been agreed in broad terms. The work has commenced and
both parties remain committed to completing the process in the shortest possible
time period, to enable Exxaro to make a final decision under the Option by 30
September 2012.
The agreed scope of work to be completed by 30 September 2012 includes:
Further technical work to be conducted on the upside potential of thermal coal
production;
Additional large diameter drilling and related additional test work to confirm
the coking and thermal coal yield assumptions over the total mining area;
A review of the optionality of coal assets in respect of adjacent farms to the
proposed Makhado Project mining area, following the update on the reserve and
resources for the Greater Soutpansberg area announced on 13 June 2012;
Progressing commercial discussions with ArcelorMittal South Africa regarding
future off-take arrangements for the Makhado Project;
Finalisation of the Makhado Project valuation as calculated in accordance with
the DFS, after taking into account the additional work to be completed; and
Finalisation of a definitive shareholders agreement between CoAL and Exxaro to
be implemented, should Exxaro decide to exercise the Option.
Makhado Project
The Makhado Project represents CoAL`s most advanced exploration stage
development project in the Greater Soutpansberg area with NOPRs over five farms,
namely Lukin, Salaita, Fripp, Tanga and Windhoek covering an area of 8,190
hectares. Based on the reserve and resource update announcement published on 13
June 2012, the JORC compliant resource for the Makhado Project, drilled over a
16.5km strike length was reported as follows:
Gross tonnes in situ - 795.6 million tonnes
Total tonnes in situ - 691.7 million tonnes
Mineable tonnes in situ - 344.4 million tonnes
CoAL commenced work on the DFS in early 2010 and between August 2010 and April
2011, excavated a 19,000 tonne bulk sample from the farm Tanga. The results of
the detailed product tests confirmed that the 10% ash product performs well
relative to other hard coking coals based on Coke Strength Reaction, Coke
Reactivity Index and Reflectance. Testing on an individual and blended basis
confirms that the hard coking coal`s higher than average fluidity, dilatation
and high vitrinite content can be regarded as the strongest characteristics of
the coal. The Company expects that these characteristics will to a large extent
balance the lower maximum reflectance and higher volatiles for potential
customers.
The application for a New Order Mining Right was submitted in January 2011 and
the process is at an advanced stage. During the quarter ended 31 March 2012, a
preliminary review of the draft DFS was undertaken by the CoAL Board of
Directors. Further work is required to evaluate various options in order to
finalise the DFS which is anticipated to be completed in the third quarter 2012,
following the revision of the time period required for CoAL and Exxaro to
finalize the project valuation. The interim report on the Makhado Project was
included in the report for the quarter ended 31 March 2012, which is available
on the company website at www.coalofafrica.com.
AUTHORISED BY:
John Wallington
Chief Executive Officer
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 89 322 6776
Sakhile Ndlovu Investor Relations Coal of Africa +27 11 575 6858
Charmane Financial PR (South Russell & +27 11 880 3924
Russell/Jane Africa) Associates +27 82 372 5816
Kamau
Jos Simson/Emily Financial PR (United Tavistock +44 20 7920
Fenton Kingdom) 3150
Chris Sim/Jeremy Nominated Adviser Evolution +44 20 7071
Ellis/Neil Securities 4300
Elliot
Reuben Govender JSE Sponsor J.P. Morgan +27 11 507 0430
Equities
Limited
www.coalofafrica.com
Competent Person
The information in this announcement that relates to mineral resources or ore
reserves has been compiled by Ms C Telfer (B.Sc. Hons. (Geol.), (DMS) Dip Bus
Man Pr. Sci. Nat., FGSSA, MAusIMM, M.Inst.D) and Mr G Njowa (M.Sc. (Min. Eng),
MRM, B.Sc.Hons. (Min. Eng), Grad CIS, MSAIMM, Pr Eng, MIAS), both full time
employees of Venmyn Rand (Pty) Ltd, who both have relevant and appropriate
experience and independence to appraise the coal assets. Both Ms C Telfer and Mr
G Njowa are considered "Competent Persons", and each have more than five years
relevant experience in the assessment and evaluation of the types of coal
exploration and mining properties presented in this announcement. Both Ms C
Telfer and Mr G Njowa consent to the inclusion of the resource information in
this announcement and as presented in the Technical Statement dated 31 May 2012
and issued by the company on 13 June 2012.
JORC Code
All coal resources are defined in accordance with the Australian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by
the Joint Ore Reserves Committee of the Australasian Institute of Mining and
Metallurgy, the Australasian Institute of Geoscientists and Minerals Council of
Australia.
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 Greater Soutpansberg Project, including CoAL`s 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 (ROM) feed tonnes per month.
CoAL`s Vele Colliery commenced 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 having been reviewed by the CoAL Board in March 2012. An
application for a New Order Mining Right for the Makhado Project was submitted
in January 2011.
In May 2012, CoAL acquired the Chapudi coal project and several other coal
exploration properties in the Soutpansberg coal basin in South Africa,
subsequently renamed the Greater Soutspansberg Project, from the previous
owners, including Rio Tinto. The Greater Soutpansberg Project is a consolidation
of nine potential coking and thermal coal assets grouped into three proximate
regions, namely Mopane, Makhado and Chapudi. The acquisition of these assets
strengthens Coal of Africa`s position as one of the most substantial holders of
prospecting and mining rights for coking coal in South Africa`s Soutpansberg
coalfield.
About Exxaro
Exxaro Coal Proprietary Limited is a subsidiary of Exxaro Resources Limited.
Exxaro Resources Limited is a JSE-listed diversified resources group and a
constituent of the JSE`s Top 40 companies index. It has direct and indirect
interests in the coal, mineral sands, iron ore and base metals commodities. The
group has operations and a strong pipeline of projects in South Africa,
Australia, Republic of Congo and China. At year end 2011 Exxaro had assets of
R37 billion.
18 June 2012
Date: 18/06/2012 08:56:01 Produced by the JSE SENS Department.
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