31st Jan 2008 07:00
Coal of Africa Limited31 January 2008 COAL OF AFRICA LIMITED Q2 Report Coal of Africa Limited ('CoAL' or 'the Company') is pleased to announce itsoperational report for the quarter ended 31 December 2007. A full copy of thisreport, as released today on the ASX, is available at the Company's website,www.coalofafrica.com. Highlights • Shareholder approval obtained for the change of name from GVM Metals Limited to Coal of Africa Limited. • Issue of 80,000,000 shares raising more than A$115 million to fund acquisitions and development of CoAL's projects. • CoAL has paid an additional £10 million thereby increasing the Company's stake in the Mooiplaats Coal Project to 49%. Subject to Section 11 consent, the Company expects to increase its stake to 70% in the current quarter. • Over 10,000 metres of drilling were completed during the quarter on the Mooiplaats coal project increasing the total amount drilled on the project to over 65,000 metres. The results of the drilling are in line with management expectations and will be released in the current quarter. • Exploration expenditure for the quarter was A$5.2 million including the payment of ZAR20 million to Exxaro Resources Limited for drilling information for 1,200 boreholes pertaining to the Baobab Coal Project. • Concluded an agreement to acquire six farms comprising 7,000Ha located in the vicinity of the Baobab coal project from Sekoko Coal (Pty) Ltd. • Finalised an agreement to acquire an area comprising 552Ha consisting of a remaining portion of the farm Holfontein and portions of the neighbouring farm Wildebeesfontein. • Nimag (Pty) Ltd's nickel magnesium alloy business continued to experience tough trading conditions accompanied by increased inventories due to reduced global nickel prices and demand and generated an EBIT for the quarter of A$512k. • Cash balance at the end of the quarter was A$117 million. Commenting on the results today, Simon Farrell, Managing Director of CoAL, said,'We are pleased to announce strong progress across the Company's coal projects.Drilling at Mooiplaats has been completed bringing the project into the 'Measured' status while negotiations with potential off takers continue. Coalprices continue to trend upwards and the market looks very encouraging. Thedrilling on the Thuli project has commenced and an 'Inferred' status is expectedearly in the next quarter. The drilling data acquired from Exxaro gives us thepossibility of bringing two of the Baobab farms into production 18 monthsearlier than we previously thought." DISCUSSION OF RESULTS Coal Activities Mooiplaats Coal Project(70% on completion of the Coal of Africa Limited transaction) During the previous quarter, CoAL was granted Mining Rights for portions 1 and 9in terms of Section 23 of the Mineral and Petroleum Resources Development Act,encompassing some 940 hectares of the 22k hectare project. Mining on theseportions is expected to commence in the second half of the 2008 calendar year. The infill drilling programme continued at Mooiplaats during the quarter and10,000 metres were drilled, bringing the total metres drilled on the project toover 65,000. On completion of the exploratory drilling phases, additional holeswill be drilled to enable water monitoring. The independent consultants' projectreports on phases 1 and 2 of the drilling together with a report on mining floorand roof support requirements is expected shortly. A further £10 million was paid as part of the £35.5 million payable to acquire70% of the Mooiplaats Coal Project. The balance payable of £10 million in cashand 4,444,445 shares will deliver the remaining 21% of the 70% stake acquired inthe project. Discussions with mining contractors have been concluded and those with potentialoff take partners - including Eskom - continued during the quarter under review. As a result of the substantial increase in the price of export thermal coal, theCompany is now reviewing its earlier plans of supplying largely unwashed thermalcoal to the domestic market and is now focusing on the possibility ofconcentrating on producing washed coals for the export market. Baobab Coal Project (100%) Gemecs (Pty) Ltd completed an initial geological evaluation and an initialgeological evaluation of the Fripp and Tanga properties based on the dataobtained from Exxaro. The evaluation yielded potential open cast resources ofover 140 million tonnes of coal in 'Measured, 'Indicated' and 'Inferred'resource categories. Total resources at Fripp and Tanga stand at 710 milliontonnes. East Coast Maritime (Pty) Ltd were appointed to assess railway, road and portinfrastructure required for CoAL's Baobab and Thuli coal projects and theirmandate has been extended to Phase 2 of the project . Phase 1 of the study hasbeen completed and the report detailing the findings will be finalised by theend of January while Phase 2 will develop the infrastructure and relationshipsidentified in Phase 1. A co-operation agreement has been signed with Transnet Freight Rail whereby CoALwill be able to acquire coal transport capacity from Transnet. Thuli Coal Project (Limpopo) (74%) LudikCore (Pty) Ltd and GeoMechanics (Pty) Ltd commenced drilling on the ThuliCoal Project and are expected to deliver a JORC/ SAMREC compliant 'Inferred'status on the Prospect area by the end of April 2008. An Aeromagnetic study ofthe Baobab, Thuli and Tshikunda Coal Projects has been contracted for February2008 with the results by the end of the current quarter. Holfontein Coal Project (100%) During the December quarter, the consultants continued to prepare the MiningWork Programme as well as the Social and Labour Plan and Environmental ImpactStudy. The Company commenced with the application for the New Order Mining Rightand the preparation of the Pre-feasibility study for the mining of theHolfontein coal project. Drilling on the new portion of Holfontein and theportions of Wildebeesfontein acquired in the previous quarter is expected tocommence in February 2008. Nimag Group of Companies (100%) The Nimag Group's profit before interest and tax for the six months was ZAR5.5million (A$980k). The nickel magnesium business continued to experience toughertrading conditions in the form of thinner margins and increased working capitalrequirements due to depressed global nickel demand combined with slow movementof goods at Durban harbour. The smaller Ferro Silicon business operated wellahead of expectations contributing to the Group's profitability. For more information contact: Simon Farrell, Managing Director Coal +61 417 985 383 or +61 8 9322 6776Petronella Gorrie The Event Shop +27 82 827 8815Jos Simson/Leesa Peters Conduit PR +44(0) 20 7429 6603Olly Cairns / Romil Patel Blue Oar Securities Plc +61 6430 1631 or +44(0) 20 7448 4400 www.coalof africa.com The information in this report as it relates to geology of the Baobab Projectwas overseen by J C Sparrow a Director of Gemecs (Pty) Ltd. Mr Sparrow is amember of the South African Council for Natural Scientific Professions (400109/03), with a BSc (Univ. of Natal), BSc Hons Geology. (Univ. of Johannesburg) anda Chamber of Mines certificate in Rock Mechanics and qualifies as a competentperson in the field of activity being reported on and consents to the inclusionof this information in the form and context in which it appears in this report. Mining exploration entity quarterly report Name of entityCoal of Africa Limited (previously GVM Metals Limited) ABN Quarter ended ("current quarter")98 008 905 388 31 December 2007 Consolidated statement of cash flows Current quarter Year to dateCash flows related to operating activities $A'000 (6 months) $A'0001.1 Receipts from product sales and related debtors 10,265 22,242 1.2 Payments for (a) exploration and (5,239) (6,681) evaluation (b) development (c) production (10,936) (28,060) (d) administration (4,685) (5,912) 1.3 Dividends received - -1.4 Interest and other items of a similar nature 127 641 received1.5 Interest and other costs of finance paid (47) (75)1.6 Income taxes paid (13) (13)1.7 Other - - Net Operating Cash Flows (10,528) (17,858) Cash flows related to investing activities1.8 Payment for purchases of: (a)prospects (21,714) (41,724) (b) equity investments - - (c) other fixed assets (447) (683) 1.9 Proceeds from sale of: (a) prospects - - (b) equity investments 497 497 (c) other fixed assets - -1.10 Loans to other entities - -1.11 Loans repaid by other entities - -1.12 Other (provide details if material) (1,860) (1,860) Net investing cash flows (23,524) (43,770) 1.13 Total operating and investing cash flows (34,052) (61,628) (carried forward) 1.13 Total operating and investing cash flows (34,052) (61,628) (brought forward) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 116,939 116,939 (net) -see note 7.4 below 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (Exchange rate related movements in foreign borrowings and reserves) Net financing cash flows 116,939 116,939 Net increase (decrease) in cash held 82,887 55,311 1.20 Cash at beginning of quarter/year to date 33,927 61,530 1.21 Exchange rate adjustments to item 1.20 154 127 1.22 Cash at end of quarter 116,968 116,968 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the relatedentities Current quarter $A'000 1.23 Aggregate amount of payments to the parties included in item 1.2 250 1.24 Aggregate amount of loans to the parties included in item 1.10 - 1.25 Explanation necessary for an understanding of the transactions Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest Financing facilities available Add notes as necessary for an understanding of the position. Amount available Amount used $A'000 $A'0003.1 Loan facilities - - 3.2 Credit standby arrangements 5,073 3,782 Estimated cash outflows for next quarter $A'0004.1 Exploration and evaluation (2,000) 4.2 Development - Total (2,000) Reconciliation of cash Reconciliation of cash at the end of the quarter Current quarter Previous quarter(as shown in the consolidated statement of cashflows) to the related items in the accounts is as $A'000 $A'000follows. 5.1 Cash on hand and at bank 2,393 33,0895.2 Deposits at call 118,357 1,4935.3 Bank overdraft (3,782) (655)5.4 Other (provide details) - - Total: cash at end of quarter (item 1.22) 116,968 33,927 Changes in interests in mining tenements Tenement reference Nature of Interest at Interest at interest beginning of end of quarter quarter (note (2))6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining Tenement reference Nature of Interest at Interest at tenements acquired or interest beginning of end of increased quarter quarter (note (2)) Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rightstogether with prices and dates. Total number Number quoted Issue price per Amount paid up per security (see note security (see note 3) 3) (cents) (cents)7.1 Preference +securities (description)7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions 7.3 +Ordinary 297,429,472 297,429,472 securities7.4 Changes during quarter (a) Increases through issues 8,888,888 8,888,888 30 pence 30 pence 590,063 590,063 34 pence 34 pence 65,000,000 65,000,000 65 pence 65 pence 15,000,000 15,000,000 A$1.50 A$1.50 (b) Decreases through returns of capital, buy-backs 7.5 +Convertible debt securities (description)7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options Exercise price Expiry date (description and conversion 23,252,263 23,252,263 See Note 6 See Note 6 factor)7.8 Issued during 1,625,000 1,625,000 Exercise price Expiry date quarter 375,000 375,000 See Note 6 See Note 6 7.9 Exercised during 590,063 590,063 34 pence 34 pence quarter7.10 Expired during Nil Nil quarter 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) Compliance statement 1 This statement has been prepared under accounting policies whichcomply with accounting standards as defined in the Corporations Act or otherstandards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed. Notes 1 The quarterly report provides a basis for informing the market howthe entity's activities have been financed for the past quarter and the effecton its cash position. An entity wanting to disclose additional information isencouraged to do so, in a note or notes attached to this report. 2 The "Nature of interest" (items 6.1 and 6.2) includes options inrespect of interests in mining tenements acquired, exercised or lapsed duringthe reporting period. If the entity is involved in a joint venture agreementand there are conditions precedent which will change its percentage interest ina mining tenement, it should disclose the change of percentage interest andconditions precedent in the list required for items 6.1 and 6.2. 3 Issued and quoted securities: The issue price and amount paid up isnot required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting forExtractive Industries and AASB 1026: Statement of Cash Flows apply to thisreport. 5 Accounting Standards ASX will accept, for example, the use ofInternational Accounting Standards for foreign entities. If the standards useddo not address a topic, the Australian standard on that topic (if any) must becomplied with. 6 Issued and Quoted Securities as at 31 December 2008: Number Issued Number Quoted Exercise Price Expiry Date Lapsed Since End of quarter 13,500,000 - A$0.50 30 September 2011 - 555,575 - GBP0.54 31 May 2009 - 196,688 - GBP0.34 17 May 2009 - 7,000,000 - A$1.25 30 September 2012 - 1,625,000 - GBP0.65 30 November 2009 - 375,000 - A$1.50 30 November 2009 - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MCM.L