[miningmx.com] — COAL of Africa (CoAL) hopes to secure Exxaro
Resources’ buy-in in the development of the Makhado project – over which the
diversified miner holds a 30% option – within months.
CoAL is preparing to start with the development of Makhado once all the regulatory
hurdles have been cleared, and is currently in negotiations with Exxaro over the
option that the group acquired in April 2009.
Reporting CoAL’s interim figures for the period to end-December on Monday, CEO John
Wallington said the results of Makhado’s definitive feasibility study was presented to
Exxaro’s board on Friday.
“I haven’t picked up any reluctance from their side to take part,’ said Wallington
when pulsed on the probability of a deal, adding he expected significant progress in
negotiations over the next two to three months. “I don’t see this investment from
Exxaro and/or another party not happening.’
The first phase of Makhado is envisaged to produce 2.5 million tonnes of coal per
annum (mtpa), which could eventually be expanded to 5 mtpa. CoAL’s CFO Wayne
Koonin said the mining right was expected to be finalised by year-end, whereafter
construction would take between 18 to 24 months.
Wallington said the pending acquisition of Rio Tinto’s Chapudi coal assets would give
the company far more flexibility and options as it aims for the 5 mtpa target. The
Chapudi assets are contiguous to the Makhado project.
Exxaro’s option does not extend over the Chapudi assets, with Koonin saying part of
the complexities in the current negotiations was how the new properties would be
folded into Makhado.
Still, CoAL’s enthusiasm for Exxaro’s involvement is quite clear.
“They understand coking coal,’ Koonin said, adding that Exxaro’s empowerment
credential, technical expertise and access to capital contributed to the lure of the
diversified miner’s involvement.
Another strategic transaction that CoAL hopes to soon finalise is an offtake
agreement with ArcelorMittal SA (also a shareholder in CoAL), which has been
dragging on longer than initially thought.
Wallington said he expected to make significant progress in this regard, also within
the next three or so months, while Amsa tested the various coal samples delivered by
CoAL to the steelmaker’s Newcastle and Vanderbijlpark plants.
In addition, CoAL would embark on an international product road show in March in
April for both Makhado and the Vele colliery.
VELE
Following the lifting of the suspension of Vele’s Integrated Water Use Licence in
October, CoAL completed the building of infrastructure and started production at the
colliery in December.
Wallington said he expected first sales in the June-quarter. Although the conclusion
of a Memorandum of Agreement (MOA) between CoAL and the Save Mapungubwe
Coalition remains outstanding, both Wallington and Yolan Friedmann, CEO of the
Endangered Wildlife Trust who is acting as spokesperson for the coalition, said the
parties were making progress.
“We were a little bit ambitious to try to get all done over December and January,’
said Friedmann, adding the parties were working towards a revised deadline of mid-
April.
The coalition in November agreed to withdraw legal proceedings and appeals against
numerous regulatory rights awarded to Vele, pending the signing of a MOA on
sustainable practices at the colliery.
