JOHANNESBURG, October 2 – Australian mining company Coal of Africa (CoAL) on Monday entered into a sale of shares and claims agreement with Mooiplaats Coal Holdings (MCH) and Mooiplaats Mining to sell its mothballed Mooiplaats Colliery in Mpumalanga province for approximately R180 million.
CoAL said the shares and claims in Mooiplaats will be sold to MCH, a consortium of investors, for an aggregate purchase price of R179.9 million.
MCH members comprise young black professionals, future Mooiplaats Colliery employees, communities, To The Point Growth Specialists and experienced coal mining executives, including Don Turvey.
In terms of the agreement, CoAL and its Black Economic Empowerment partner Ferret Mining & Environmental Services will dispose of 100 percent of their shares in Mooiplaats and the CoAL Group will dispose of their respective claims against Mooiplaats and Langcarel Proprietary Limited, the owner of the Mooiplaats thermal coal colliery and a wholly owned subsidiary of Mooiplaats.
The implementation of the transaction is conditional on the fulfilment or waiver of various conditions precedent.
The Mooiplaats Colliery is a thermal coal colliery situated in the Ermelo coal fields, adjacent to the re-commissioned Camden Power Station operated by state power utility Eskom.
The underground Mooiplaats Colliery was developed by CoAL from an abandoned box-cut in early 2008 with the first coal extracted in 2009.
Mining was undertaken by a contract miner until June 2011 and, following an operational assessment, CoAL retained the existing workforce and equipment and commenced operating the mine.
The reduction in global thermal coal prices from 2013 and rapidly increasing logistics costs resulted in the Mooiplaats Colliery being placed under care and maintenance in October 2013, and this status continues to present day.
Mooiplaats Colliery was placed on care and maintenance from 1 October 2013, and CoAL had been engaged in a formal sale process to dispose of this asset since then in a bid to deliver on the company’s strategy of restructuring its balance sheet and unlocking shareholder value.
CoAL had initially agreed to sell Mooiplaats Colliery to Blackspear Capital, a privately-owned company which focuses on operating and developing a portfolio of coal assets in South Africa, for R250 million. But the deal collapsed in 2015.
Mooiplaats Colliery is an underground single-seam mining asset that still has at least 45 million mineable tonnes of coal in situ.
CoAL chief executive, David Brown, said the sale of the Mooiplaats Colliery was the final step in the company’s balance sheet restructuring strategy setting the course for it to become a self-sufficient mid-tier coal mining company.
“The disposal will yield annual operational cost savings of approximately $1.4 million and the aggregate proceeds of approximately R179.9 million will be used to settle Ferret, our Mooiplaats Black Economic Empowerment partner, funding for further development of the flagship Makhado Project or the potential acquisition of a cash generating asset,” Brown said.
“The sale also frees up valuable in-house human resources, facilitating additional focus on Makhado, ensuring the asset can be brought to production optimally.”
– African News Agency (ANA)