Karl Gribnitz, CEO, SACMH
Send this article to a friend
Print this page

» Scramble for SA coal underway
» SA coal given months to end supply crisis
» SA coal in $950m expansion boost
» SA Coal mulls major asset swoop
» SA Coal plans aggressive growth, exports

> JSE:SOUTH AFRICAN COAL MINING HLDGS LTD:
41c 0%
If you want to share this article, simply sign into one of these sites and select your network. It’s that easy Click here to find out more about how to use this button

SACMH close to deal, another in the pipeline
Allan Seccombe
Posted: Tue, 18 Mar 2008

[miningmx.com] -- SOUTH African Coal Mining Holdings (SACMH) is months away from announcing an acquisition of additional coal holdings near its Ilanga coal mine and has another possible purchase it is working on, CEO Karl Gribnitz said on Tuesday.

SACMH has a total capital expenditure budget of R205m over the next four years, which will be financed out of internal cash flows, a small equity issue and an innovative listed debt instruments, Gribnitz told Miningmx.

The debt instrument could also be used to finance growth in the company. It already has 19 million tonnes of saleable reserves.
you will always see something going on
“We want to use innovative financial products to enhance our empowerment status and our ability to grow.”

SACMH will also utilise infrastructure debt funding because a chunk of the work they are doing is putting in a rail siding and associated power, for example, to simply its logistics processes.

Capital demand will peak at R89m in 2009, dropping sharply thereafter.

The junior coal company, which listed on the JSE in August 2007, effectively started production, predominantly at its Umlabu mine, in October. SACMH posted an operating profit of R130m for the 18 months to end-December 2008.

Current production is 100,000 tonnes of coal a month, of which 41,000 tonnes is sold under a three-year contract to state power utility Eskom’s Camden power station. The contract is for a total 1.2 million tonnes.

A further 55% of the coal is destined for the export market and the remainder is sold to domestic users.

Export coal sales are attaining prices around R1,000/tonne, while Eskom sales are around R110/tonne because it is barely beneficiated.

SACMH will reach output of 1.7 million tonnes of saleable coal a year from 2011 after a R30m upgrade of its Umlabu processing plant and the proportions of sales will be the same as they are now.

Click Here to subscribe to our daily newsletter
Heavy March rains, which has seen 200 mm falling over the opencast mine in recent days, halting production of the 50,000 to 70,000 tonnes mine, SACMH has underground production and stockpiles to meet its obligations, Gribnitz said.

There is another potential transaction SACMH is working on as part of its focus on consolidating holdings near its existing operations in the Ermelo coalfields of the Mpumalanga province.

“We are busy with something. We are trying to consolidate our management focus around the areas where we are currently operating,” Gribnitz said, adding the company was cautious of spreading its management too thin over too wide an area.

SACMH has acquired the exploration property of Kromkrans some 19km away from existing mining operations for which it is putting together a drilling programme.

“I give an undertaking you will always see something going on. Over the next two to three years the possibility is good that earnings will always be partially from operations and structuring,” he said.

SACMH is understood to be in talks with Ilanga’s neighbour, Anglo Coal’s Goedehoop mine, and possibly a nearby mine belonging to BHP Billiton’s Ingwe.

“We’ve had favourable discussions, but we’ve focussed on getting Umlabu going. We also brought in Kromkrans. But Ilanga is going nicely and we expect to make an announcement in the next three months or so,” Gribnitz said, declining to identify who was involved in the transaction.