[miningmx.com] – WATERBERG Coal Company (WCC) said Eskom had agreed to lower coal yields from its proposed 10 million tonnes/year (mtpa) Waterberg Joint Venture thermal coal project in the Limpopo province.
This was in terms of a coal supply agreement (CSA) that the South African power utility wanted to extend to 40 years from the original 30 years proposed by WCC.
The CSA has not get been signed with WCC estimating it could take another year from an Eskom contract before it could secure finance to build the Waterberg Joint Venture. It has proposed building a smaller export-dedicated coal mine in the interim.
“Eskom requested that the proposed off-take term be increased from a 30 year period, to a 40 year period, and have made several concessions on coal quality in order to increase the yield and reduce the operating costs,” WCC said in a statement.
It was commenting in its 2014 financial year-end figures in which it posted a $49.2m loss (2013: $69m profit) in which it added that it was in negotiations with Exxaro Resources to share infrastructure.
WCC’s proposed Waterberg Joint Venture borders Exxaro’s Thabametsi coal project which is slated to produce just over 10mtpa of power station coal by 2024, according to a recent Exxaro Resources presentation.
WCC said that its project team had “… engaged with Exxaro on the possible sharing of logistics infrastructure and the construction of access roads across the Exxaro/Sekoko Coal properties”. Sekoko, which was awarded the mining licence to the Waterberg Joint Venture, is WCC’s asset-level empowerment partner.
In the meantime, payment on a A$35m loan WCC has with Standard Bank is due on October 9. WCC said on September 16 that it was in discussions to extend the maturity date on the Standard Bank loan.
It was anticipated that the loan could be converted into equity in the project – an option that is not possible whilst WCC is still to conclude the CSA with Eskom and whilst it considers developing a smaller project instead.
“At the current date such discussions are ongoing and no arrangements have yet been concluded for the restructure, extension or conversion of the facility,’ the company said in its statement to the JSE last month.
WCC said that it had cash on hand of $4.9m as of June 30 compared to cash of $17.6m as of the 2013 financial year-end.
