23rd Oct 2014 09:19
LONDON (Alliance News) - Coal of Africa Ltd Thursday said it is discussing offtake agreements with potential customers for its Vele colliery in the Limpopo Province in South Africa as it plans to exit from its Mooiplaats colliery to focus on its operations in Limpopo.
Coal of Africa's Mooiplaats colliery in the Ermel coalfield in South Africa was placed on care and maintenance during the fourth quarter ended September 30. Whilst being serviced, the company signed an agreement to sell the collier to a wholly own subsidiary of Blackspear Holdings Proprietary Ltd for USD22.2 million.
The deal will be broken into two tranches, the first tranche for USD13.3 million is to be received in the first three months of 2015 and the second tranche of USD8.9 million will be paid within 12 months of the first tranche being paid or by November 30, it said in a statement.
"The proposed disposal of the Mooiplaats Colliery ensures that Coal of Africa is positioned to focus on the development of its significant coking and thermal coal assets in the Limpopo Province," said Chief Executive David Brown.
"Proceeds from the capital raise and the income from the disposal of non-core assets will be used to repay the Investec working capital facility in accordance with its terms, settle all outstanding liabilities over time and advance the company's projects," he added.
Coal of Africa's Vele colliery is currently undergoing modification. The company is expecting to receive approval for the modifications from South Africa's Department of Environmental Affairs by the end of 2014. However, it is suspending construction of the modifications until the third quarter of the 2015 calendar year, as it is not expecting to receive renewal of its integrated water-use license until the first half of 2015, it said in a statement.
The modifications of the plant are due to be finished by the end of the 2015 calendar year, with a production ramp-up phase expected in early 2016, it added.
"Discussions with potential customers for the Vele Colliery coal continued during the quarter, and the company expects to convert these into formal off-take agreements during the calendar year of 2015," said Coal of Africa.
Coal of Africa shares were up 4.1% to 3.20 pence per share Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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