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JSE suspends SA Coal Mining Holdings
Allan Seccombe
Posted: Mon, 04 May 2009
[miningmx.com] -- SHARES in coal junior South African Coal Mining Holdings (SACMH) have been suspended from trade on the JSE.
The JSE told shareholders the shares had been suspended with immediate effect from Monday, 4 May, because it had not filed a reviewed provisional report within a stipulated three-month period. The shares ended Friday at 41 cents, off the year-low of 20 cents but far away from the high of 500 cents.
CEO Grant Scrutton was not immediately available to comment and his mobile phone was too full of messages to take another one.
At the end of March, SACMH placed all its mines on care and maintenance for three months, knocking the share price down to a 12-month low of 20 cents on the JSE, a 65% decline. It is laying off 140 contract workers and 18 staff.
The decision was made because of sharply lower coal prices and difficult operating
conditions, the company said at the time.
The board planned to review its mines, including their capital requirements and cost structure, with a view to deciding on the future direction of the business.
Asked then if the three months is enough to turn the business around, CEO Grant Scrutton told Miningmx: "It's just got to. I can raise just sufficient funds for us to apply our minds. It's not something you want to procrastinate on for too long. It's enough opportunity for anything from corporate action to rebuilding mining cost models."
Niall Carroll, who heads Royal Bafokeng Holdings, which effectively owns 35% of SACMH, said they were waiting to hear back from management on the review process and that it was too soon to say if more money would be invested in the junior coal company.
RBH, which has generated funds from royalty payments from Impala Platinum, initially invested around R35m in the coal company, but over the past 18 months invested
another R100m more. It would be fair to say RBH is not pleased at the latest development.
"It started off as a relatively small investment for us as we tried to find out feet in the coal business. We did not have the opportunity to buy into bigger and higher quality assets," Carroll told Miningmx.
"This business is better suited for a bull market than a bear market," he said. "The coal price has been one of the biggest issues. It is a relatively high-cost asset and at current coal prices the business is under pressure."
RBH would offer what assistance it could, but ultimately the management needed to devise a strategy and present it to investors, he said.
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