[miningmx.com] — COAL junior Keaton Energy has said it is on the
lookout for new assets, seeking acquisitions to complement the company’s recent
takeover of Leeuw Mining and Exploration (LME) and eventually lift output to become
a mid-tier 5 million tonnes per annum (mtpa) producer.
Taking financial media on a visit to LME’s Vaalkrantz colliery outside Vryheid on
Wednesday shortly before the company was to enter a closed period – its financial
year ends March 31 – MD Paul Miller said the Vaalkrantz coal processing plant would
be the company’s linchpin for expansion and acquisitions in the region.
The plant was built seven years ago by the previous owners, and would far surpass
the anthracite colliery’s current life-of-mine of 33 months.
“[Vaalkrantz] is a very useful property because of the beautiful plant,’ Miller said. “It
makes us the go-to guys for any resource in the region.’
Keaton received regulatory approval for the acquisition of LME in late 2011 after it
took out Anglo Coal’s exposure to a troubled BEE deal in return for injecting R65m
(Anglo’s stake was valued R73m at the time) as rescue funding the previous year.
Miller said Keaton’s support to LME during the acquisition process has enabled the
colliery to move out of distress and become cash generative.
A next step for the asset would be the development of Koudelager – an extension
project for Vaalkrantz which would see the colliery’s expected life increase to eight
years.
The company hopes to cash in on the surge in demand for high quality anthracite
coal, driven by the growing market for surgical reductants as well as ferrochrome
producers substituting coke and thermal coal blends for anthracite.
Another asset that came as part of the LME deal was the Braakfontein thermal coal
project in Newcastle. Miller said it had the potential for a 660,000 tpa mine with a 20-
year life. However, full Samrec-compliant figures would be provided when the
company reports full-year results in May.
“We need to move aggressively,’ he remarked on Braakfontein, saying the project’s
development would require the company to raise funds. A two-year old feasibility
study estimated capital requirements at R300m, but the amount is likely to be
adjusted upwards once the results of the study have been reviewed.
With Keaton’s original major development, the Vanggatfontein colliery close to
Delmas, being on course to produce some 2.4 mt of coal per annum over the medium
term, Miller said the group would have to add more assets to its portfolio if it was to
achieve the longer term target of becoming a 5 mtpa producer. Such acquisitions
would centre around the Vaalkrantz plant.
“We’re officially on the acquisition path and need to extend the life of this
[Vaalkrantz] operation,’ he said. “I want the guys [Vaalkrantz management] to be
able to present me with a menu of options on how we can move forward.’
