TIDMCZA
RNS Number : 3792S
Coal of Africa Limited
02 October 2017
ANNOUNCEMENT 2 October 2017
SALE OF THE MOOIPLAATS COLLIERY
Shareholders are advised that on 29 September 2017 Coal of
Africa Limited ("CoAL" or the "Company") and its wholly owned
subsidiary, GVM Metals Administration (South Africa) Proprietary
Limited (collectively the "CoAL Group"), as well as its Black
Economic Empowerment partner Ferret Mining & Environmental
Services Proprietary Limited ("Ferret") entered into a sale of
shares and claims agreement ("the Agreement") with Mooiplaats Coal
Holdings Proprietary Limited ("MCH") and Mooiplaats Mining Limited
("Mooiplaats"). In terms of the Agreement, CoAL and Ferret will
dispose of 100% of their shares in Mooiplaats and the CoAL Group
will dispose of their respective claims against Mooiplaats and
Langcarel Proprietary Limited ("Langcarel") ("the Transaction"),
the owner of the Mooiplaats thermal coal colliery ("Mooiplaats
Colliery") and a wholly owned subsidiary of Mooiplaats.
The shares and claims in Mooiplaats will be sold to MCH, a
consortium of investors, for an aggregate purchase price of R179.9
million (the "Purchase Price"). MCH members comprise young black
professionals, future Mooiplaats Colliery employees, communities,
To The Point Growth Specialists Proprietary Limited and experienced
coal mining executives, including Don Turvey. The consortium is
funded by the newly established Last Mile Fund created by Africa
Rainbow Capital, Bernard Swanepoel, Sipho Nkosi and Clinton Halsey,
and MCH's structure is compliant with the proposed requirements of
the currently suspended third version of the South African Mining
Charter.
Rationale for the Transaction
In delivering on the Company's strategy of restructuring its
balance sheet and unlocking shareholder value, CoAL embarked on a
formal sale process for the Mooiplaats Colliery during 2013. This
Transaction concludes the process and the proceeds of the Purchase
Price received by the CoAL Group will support the Company's project
pipeline, ensuring it is well positioned to deliver on its flagship
Makhado Project.
Background to Mooiplaats
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 Q3
CY2009. 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.
Terms of the Transaction
Under the terms of the various agreements governing the
Transaction, the Purchase Price is to be settled as follows:
-- An initial purchase price of R67.0 million ("Initial Purchase
Price") shall be held in Escrow by the Company's legal advisors and
be paid over to the respective sellers in the agreed proportions
set out below on the Closing Date as contemplated in the Agreement,
being the later of:
i. 1 November 2017; and
ii. The second business day immediately following the day on
which the last of the conditions precedent to the Agreement are
fulfilled or waived (the "Closing Date").
-- The Initial Purchase Price will be settled in cash as follows:
o R15.0 million to Ferret for their 26% interest in the
Mooiplaats Colliery shareholding; and
o R52.0 million to the CoAL Group for the balance of equity
shareholding in Mooiplaats, and the claims against Mooiplaats and
Langcarel.
-- The balance of the Purchase Price, being R112.9 million, will
be settled in ten equal quarterly instalments (the "Deferred
Payments"). The first Deferred Payment is anticipated to be due and
payable on the last business day nine months after the Closing
Date.
The Purchaser will acquire ownership of (and all risk in and
benefit to) the shares in Mooiplaats, and Claims against Mooiplaats
and Langcarel, with effect from the Closing Date and, will be
responsible for operations at the Mooiplaats Colliery from this
date. As security for the Deferred Payments, and as a condition
precedent to the Agreement, the parties will enter into various
security agreements and bond documents which include, without
limitation, a pledge and cession agreement whereby, as security
for, inter alia, the Deferred Payments, each of MCH, Mooiplaats and
Langcarel will pledge their respective shares and cede their rights
in their respective shares and claims, and each of Langcarel and
Mooiplaats will guarantee, inter alia, the payment by MCH of the
Deferred Payments. Further, a special notarial bond will be
registered in respect of specific assets of Langcarel as well as a
general notarial bond over the remaining assets of Mooiplaats and
Langcarel assets.
Conditions Precedent
The implementation of the Transaction is conditional on the
fulfilment or waiver (to the extent permitted in the Agreement) of
various conditions precedent, which are customary for a transaction
of this nature and includes, inter alia:
-- MCH replacing the Mooiplaats Colliery rehabilitation
guarantees (the "Guarantee") in a form satisfactory to the CoAL
Group, and procuring the unconditional and irrevocable release of
the Guarantee from the Department of Mineral Resources;
-- MCH replacing the Mooiplaats Colliery's Eskom Guarantee, and
procuring the unconditional and irrevocable release of this
guarantee by Eskom in a form satisfactory to the CoAL Group;
-- the registration of a special notarial bond over specific
assets of Langcarel and a general notarial bond with the relevant
Deeds Office over the remaining Langcarel assets;
-- the entering into pledge and cession agreements, as well as
various security agreements, regulating the enforcement of the
securities contained under the security agreements, in respect of
which the Deferred Payments are secured;
-- obtaining Takeover Regulation Panel approval or exemption for the Transaction; and
-- entering into an agreement with Anker Mineral Coal Holdings
South Africa Proprietary Limited ("Anker") regulating, amongst
others, the abandonment by Anker of its prospecting right over
Portion 2 of the farm Klipbank and the incorporation of this area
into the Mooiplaats Colliery New Order Mining Right.
David Brown, Chief Executive Officer of CoAL, commented:
"The sale of the Mooiplaats Colliery is the final step in the
Company's balance sheet restructuring strategy setting the course
for CoAL 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. The sale also frees up
valuable in-house human resources, facilitating additional focus on
Makhado, ensuring the asset can be brought to production
optimally."
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
Stephen Rowse Business Executive Coal of Africa 8000
Endeavour Corporate +61 08 9316
Tony Bevan Company Secretary Services 9100
Qinisele Resources (Proprietary) Limited (Corporate Adviser to
CoAL)
Robert Philpot and Dennis Tucker (Telephone: +27 (0)11 883
6358)
Company advisors:
Matthew Armitt/Ross Nominated Adviser Peel Hunt +44 20
Allister and Broker LLP 7418 8900
Jos Simson/Emily
Fenton/ Barney Financial PR +44 20
Hayward (United Kingdom) Tavistock 7920 3150
Charmane Russell/Olwen Financial PR Russell & +27 11
Auret/ Edith (South Africa) Associates 880 3924
Leeson or
+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 Uitkomst Colliery, Makhado Project (coking and thermal
coal), Vele Colliery (coking and thermal coal) and the Greater
Soutpansberg Project (MbeuYashu).
This announcement is inside information for the purposes of
article 7 of EU Regulation 596/2014.
Forward-Looking Statements
This Announcement, including information included or
incorporated by reference in this Announcement, may contain
"forward-looking statements" concerning CoAL and/or MCH that are
subject to risks and uncertainties. Generally, the words "will",
"may", "should", "continue", "believes", "expects", "intends",
"anticipates" or similar expressions identify forward-looking
statements. These forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially
from those expressed in the forward-looking statements. Many of
these risks and uncertainties relate to factors that are beyond
CoAL's ability to control or estimate precisely, such as future
market conditions, changes in regulatory environment and the
behaviour of other market participants. CoAL cannot give any
assurance that such forward-looking statements will prove to have
been correct. The reader is cautioned not to place undue reliance
on these forward looking statements. CoAL and MCH assume no
obligation and do not undertake any obligation to update or revise
publicly any of the forward-looking statements set out herein,
whether as a result of new information, future events or otherwise,
except to the extent legally required.
Statements of intention
Statements of intention are statements of current intentions
only, which may change as new information becomes available or
circumstances change.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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October 02, 2017 04:00 ET (08:00 GMT)
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