Three new coal listings for the JSE

Brendan Ryan | Thu, 28 Jan 2010 11:09
[miningmx.com] -- THREE coal companies are due to list on the Johannesburg Stock Exchange this year as market conditions for the sector improve with rising export prices and continued concern from Eskom over security of its future coal supplies.

The companies are Delta Mining, Optimum Colliery (Optimum) and Universal Coal Plc which will list both on the JSE and on London’s AIM (Alternative Investment Market) bourse.

Bernard Swanepoel’s To The Point business consultancy and operating company holds a 21% stake in Delta Mining.

He told Miningmx today that Delta would list on the JSE this year - hopefully by May - or, failing that, by September.

“The issue is the Soccer World Cup. If we can’t get the listing in place by May then we have been advised to hold off until that is over and conditions in the country return to normal.”

Swanepoel said Delta would go for a listing based on two main coal assets it owned which were Rietkuil near Delmas and a coal/uranium resource on the Springbok Flats north of Pretoria.

“We estimate 70% of the value of the company will be represented by the Rietkuil project. We are looking at this stage on how it should be developed. Do we go big from the outset setting up a mine to produce around 3mt/year or do we take a more selective approach and start up with a smaller operation.

“It’s on our wish list to set up an operation that would sell coal both to Eskom as well as onto the export markets.”

Optimum is the mine which Mvelaphanda Resources (Mvela) tried to buy last year in a deal aimed at retaining its listing on the JSE through becoming an operating company instead of a pyramid holding company.

That was never confirmed by either Mvela or Optimum but industry sources are adamant that Optimum was the “major mining asset” that Mvela was looking at.

Optimum formerly belonged to BHP Billion Energy Coal South Africa (Becsa) which sold it for an undisclosed amount in May 2008 to Optimum Coal Holdings (OCH) which is a 65% black owned and controlled organisation.

It’s a multi-product colliery in Mpumalanga which produced more than 11.6 million tonnes (mt) of coal in the year to end-June 2007.

The coal was supplied to Eskom’s Hendrina power station as well as to the export market through the Richards Bay Coal Terminal (RBCT) with minor volumes going to SA domestic consumers.

As part of the deal OCH also bought 6.5mt/year of export entitlement through the RBCT but Becsa contracted to market all the export coal produced by Optimum until 2021.

The chairman of OCH is Eliphus Monkoe who is a former chief operating officer at Becsa. The CEO, Mike Teke, was formerly human resources director at Impala Platinum – the world’s second largest platinum producer.

According to an OCH statement Optimum Colliery currently sells more than 5.5mt annually to the Hendrina power station and has invested in “further exploration and mining projects” in order to export to its full RBCT quota of 6.5mt/year.

The major shareholder in OCH is Warrior Coal Investments. Optimum spokesman Willem Eksteen declined to comment when approached about the proposed listing.

Universal Coal has three thermal coal projects located near Witbank and is run by executive chairman Tony Harwood who is well-known in South African mining circles.

He was formerly a vice-president of Placer Dome and set up the group’s South African office after Placer Dome bought into the Western Areas gold mine through a JV with JCI.

Harwood, who is attending the McCloskey South African Coal Exports conference currently being held in Cape Town, has confirmed to Miningmx the plans to list Universal on the JSE and AIM bourses.

The most advanced of Universal’s projects is the 89Mt Kangala coal project where first production is expected in the second half of this year.

Universal’s Roodekop and Brakfontein projects are expected to follow with initial production expected in 2012.

The three projects have combined mineable in situ resources of 275mt of which 260mt are JORC inferred/indicated. They are expected to produce 4.5Mtpa by 2012.