TIDMCZA
RNS Number : 2577L
Coal of Africa Limited
30 September 2016
ANNOUNCEMENT 30 September 2016
FULL YEAR RESULTS FOR THE PERIODING 30 JUNE 2016
Coal of Africa Limited ("CoAL" or the "Company") is pleased to
provide its audited Annual Financial Statements for the year ended
30 June 2016. The full report is available on the Company's
website: www.coalofafrica.com.
Highlights:
-- No fatalities (FY2015: none) and no lost time injuries
recorded during the year (FY2015: none);
-- IWUL for the Makhado Project ("Makhado" or the "Project") has
been granted by the Department of Water and Sanitation ("DWS") for
a period of 20 years. The IWUL was automatically suspended
following an appeal to the DWS submitted by the Vhembe Mineral
Stakeholders Resources Forum. Discussions remain ongoing with the
DWS;
-- The Optimisation Study and Front End Engineering and Design
("FEED") for the Makhado Project has been completed by the
International engineering and project delivery group DRA Projects
South Africa demonstrating a 31% reduction in upfront capital
requirements to US$280 million;
-- The Company signed a non-binding Memorandum of Understanding
with Qingdao Hengshun Zhongsheng Group Co Ltd with respect to a
proposed equity investment in Baobab Mining and Exploration (Pty)
("Baobab") a subsidiary of the Company. Baobab is the subsidiary of
CoAL that owns the mining right for the Makhado Project.;
-- The Integrated Water Use Licence ("IWUL") for the Vele
Colliery ("Vele" or the "Colliery") in the Limpopo Province has
been renewed for a further twenty years as well as approval of
amendments required for the planned Plant Modification Process
("PMP");
-- The South African Minister of the Department of Environmental
Affairs, has dismissed an Appeal against the Environmental
Authorisation ("EA") Amendment for the Vele Colliery in the Limpopo
Province. During the year the Company was granted an EA to
incorporate all amendments for the PMP; and,
-- Mooiplaats Colliery is still on care and maintenance and is subject to a formal sale process
Review of Operations
Makhado Coking Coal Project (74% owned)
The New Order Mining Right ("NOMR") for the Makhado Project was
granted in May 2015 as well as a section 11 approval for the
transfer of the right to CoAL's 74% owned subsidiary, Baobab
Mining. The Company was granted the IWUL in January 2016 for the
period equal to life of mine. The Company completed a Definitive
Feasibility Study ("DFS") for Makhado during FY2013 which indicates
that the project has 344.8 million mineable tonnes in situ and a 16
year life of mine. The opencast project is expected to produce 12.6
million tonnes per annum ("Mtpa") of ROM coal yielding 2.3Mtpa of
hard coking coal and 3.2Mtpa of thermal coal for domestic and
export markets. The Makhado project finalised the FEED during the
2016 financial year and is currently engaged with investors to
complete the funding for the project. Once funding is in place and
regulatory approvals have been obtained the Company expects board
approval to commence construction by the second half of CY
2017.
The optimisation study and FEED focused on the identification of
opportunities for improving the functionality of the project as
well as the reduction of both capital and operational costs,
without compromising the ability to achieve the designed production
throughput and product quality.
The DFS, concluded in June 2013, was further enhanced through
the FEED process by:
-- Improving the coal handling and product stockpiling infrastructure;
-- Improving the coal processing plant efficiency on the back of
additional coal quality information obtained post the DFS;
-- Improving the flotation tailings handling by changing
equipment selected during the DFS to ensure a higher tolerance for
variation in super fines content; and
-- Significantly reducing the infrastructure capital with the
introduction of "fit for purpose" buildings , roads, terraces and
water reticulation.
The project Capital estimate was updated as part of the FEED
deliverables. The total capital cost of US$406million quoted in the
June 2013 DFS was reduced to US$280million, which equates to a
reduction of 31%.
During FY2016 Q2 the Company was granted a 20 year IWUL for the
Makhado project. Following an appeal to the DWS submitted by the
Vhembe Mineral Resources Forum and other parties this IWUL was
suspended. The appeal automatically suspended the IWUL in terms of
Section 148 (2) (b) of the South African National Water Act No 36
of 1998. This appeal had been anticipated, and CoAL has submitted
urgent representation to the Minister of Water and Sanitation to
request that the IWUL remain in full force and effect pending the
final conclusion of the appeal by the Water Tribunal. Discussions
are ongoing.
CoAL remains committed to the sustainable development of the
Makhado Project, whilst recognising its potential to drive
significant socio-economic transformation. The Company continues to
engage with all stakeholders to ensure the on-going implementation
of a co-existent model, seeking co-operation between mining,
agriculture and heritage land uses.
Vele Colliery - Limpopo (Tuli) Coalfield (100% owned)
Vele Colliery received the extension and amendment of the Vele
IWUL during the year under review. Given the prevailing commodity
market conditions the Company applied for all approvals to cover
future mining areas which includes the diversion of two
non-perennial streams. When the latest approval is finalised
(expected toward the end of CY2016) the Company will make the
decision on the commencement of the plant modification taking into
account the prevailing market conditions.
Greater Soutpansberg Assets (74% owned)
The exploration and development of the CoAL prospects in the
Soutpansberg coalfield is the catalyst for the long-term growth of
the Company. The DMR is considering the Company's NOMR applications
for the Mopane, Generaal, Chapudi and Telema and Gray projects.
General:
-- The Company agreed the terms of a recommended offer to be
made by CoAL for the entire issued and to be issued share capital
of Universal Coal Plc ("Universal"). The offer lapsed post year
end.
-- During the year the Company received a notice from Rio Tinto
Minerals Development Limited ("Rio Tinto") and Kwezi Mining
Proprietary Limited alleging that the Company is in breach of an
obligation under the agreements pursuant to the acquired interests
in Chapudi Coal Pty Ltd and Kwezi Mining Exploration Pty Ltd, and
therefore all amounts owed by CoAL and MbeuYashu were claimed as
due and payable. New payment terms have been negotiated with Rio
Tinto for the outstanding liability FY2016: US$16.5million (FY2015:
US$19.8 million) owing to Rio Tinto with the balance to be paid in
monthly instalments of at least US$650,000 plus interest, and final
settlement date of June 2017 has remained unchanged.
Financial review
-- No revenue was generated during the year as result of all
operations on care and maintenance (FY 2015 $nil)
-- Non-cash charges of US$12.8 million (FY2015: US$7.5 million) including:
-- depreciation and amortisation of US$1.2 million (FY2015:
US$1.4 million);
-- unrealised foreign exchange loss of US$9.5 million (FY2015:
US$18.9 million gain) as a result of the South African rand
weakening against the United States dollar; and
-- share based payment expense of US$0.2 million (FY2015: US$3.1
million).
-- Total unrestricted cash balances at year-end, including cash
held by operations available for sale of US$19.5 million (FY2015:
US$17.8 million).
Chief Executive Officer, David Brown, commented:
"The financial results for the year ended 30 June 2016 continue
to reflect the progress on transitioning into a project development
company. Most legacy issues have now been resolved and progress has
been made on a number of regulatory matters at both Makhado and
Vele. We have started the process to acquire a cash generating
asset in order to provide the company with a sustainable future.
Despite not consummating the Universal Coal transaction we are
actively pursuing other acquisition opportunities."
For more information contact:
Chief Executive +27 10 003
David Brown Officer Coal of Africa 8000
Chief Financial +27 10 003
De Wet Schutte Officer Coal of Africa 8000
+27 10 003
Celeste Riekert Investor Relations Coal of Africa 8000
Endeavour Corporate +61 08 9316
Tony Bevan Company Secretary Services 9100
Company advisors:
Financial
Jos Simson/Emily PR (United +44 20 7920
Fenton Kingdom) Tavistock 3150
Matthew Armitt/Ross Nominated +44 20 7418
Allister Adviser/Broker Peel Hunt LLP 8900
Charmane Russell/Olwen Financial Russell & Associates +27 11 880
Auret PR (South 3924 or
Africa) +27 82 372
5816
Investec Bank Limited is the nominated JSE Sponsor
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 /MbeuYashu, including CoAL's Makhado Project
(coking and thermal coal).
The company news service from the London Stock Exchange
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