[miningmx.com] – COAL of Africa (CoAL) secured a R200m bridging loan from a South African bank, enough to steer the company through two years of working capital while it re-scopes its Vele colliery, and sources funds for its $406m company-making Makhado project.
Commenting on the firm’s outlook, David Brown, executive chairperson of CoAL and its interim CEO, said it had also been repositioned as a project development company after setting down plans to sell or close its remaining operating units.
The asset sales included its Woestalleen complex, valued at R80m, and Mooiplaats, a mine currently undergoing restructuring but also likely to face closure.
Owing to the high cost nature, especially of Mooiplaats and Vuna collieries, lower international coal prices, and the $48.5m write-down of Mooiplaats, CoAL posted a $148.2 loss, slightly deeper than the previous year’s net loss of $138.9m.
The company sold 292,540 tonnes of coal in the 2013 financial year, a 27% decline year-on-year.
From a cash perspective, CoAL mowed through some $70m of funds pumped into the it following the sale of 23.6% of its shares to China’s Beijing Huahoa Energy (BHE).
“There was a large amount of cash lost in the existing operations, about $70m,’ said Brown. “That cash saving will be supplemented by $3m a year in corporate overhead savings which resulted in unfortunate retrenchments,’ he said.
The last production from the Vele coking coal colliery would be around October as CoAL sought to expand the Limpopo province mine and improve the plant in order for it to produce two grades of thermal coal – for the alloys industry and Eskom – in addition to coking coal.
An expanded Vele producing 2.7mtpa would start to ramp-up from about 2015 with a positive contribution from the mine likely a year later.
All in all, four of five assets owned by CoAL have been deemed non-core and due for sale while the company shake-up has also been extended to CoAL’s management with seven directors having taken their leave of the company in the last financial year including former CEO, John Wallington.
CoAL is seeking a replacement CEO and hopes to short-list candidates.
Brown said there had been no decision on whether he would make his interim involvement as CEO a permanent move. “I wanted to see the company through this interesting phase. I thrive on it,’ he said.
The market has taken a negative view of CoAL’s full-year earnings performance, however. Shares in the company were 3% lower at the time of writing at R1.25, roughly a R1 weaker than 12 months ago when they were trading at R2,20/share.
“We needed to be decisive and we have done that. We will reduce the operational losses significantly. We also have the full support of our shareholders,’ said Brown. CoAL’s top 15 shareholders comprise 80% of the share register.
