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Wescoal to buy mines in three months
Allan Seccombe
Posted: Thu, 03 Jul 2008
[miningmx.com] -- WESCOAL will spend the R80m it raised in a rights issue on growing briquette output, exploring and developing assets and potentially buying producing mines in the next three months, CEO Andre Boje said.
Wescoal currently buys run-of-mine coal from companies that don’t have washing plants. Wescoal has a washing plant, with a capacity of some 40,000 tonnes, to produce saleable coal.
The company wants to move into production and plans to start mining by September of this year from two small coal deposits that are close to its washing plant and for which it has mining rights, Boje told Miningmx.
“We want to mine our own coal to reduce our input costs and improve our volumes,” he said.
The existing assets could generate 100,000 tonnes a month of thermal coal for the domestic and export markets. There is a larger coal deposit that could be brought into production by the end of next year, adding up to 150,000 tonnes/month more to group output.
“We will talk to Eskom, but in all probability it will be sold to customers with existing contracts,” he said, adding the sale of coal to power utility Eskom was not the company’s focus.
The acquisitions, which will be production assets, could be made within the next three months, he
said, declining to give further details.
“If you look at the export price of coal we needed to get into production of the product rather than just trading it,” Boje said.
“It’s taken a while to get our wheels moving but now they are moving,” he said.
The washing plant will also be upgraded with the money, he said.
Briquette production will be increased tenfold to 20,000 tonnes/month.
The Wescoal board will on 31 July give final approvals for the allocation of the R80.5m.
Wescoal shares traded down 8.7% to R2.10 on fairly high volumes compared to what is normally traded in the company. The overall market was down more than three percent.
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