[miningmx.com] – THE uncertainty surrounding the South African coal assets of Continental Coal may be drawing to an close after the Sydney-listed firm said it had received offers for its 74% stake in the local subsidiary.
The company’s board was overhauled on January 29 after a production shortfall at its then newly commissioned Penumbra mine in South Africa’s Mpumalanga province left it with insufficient funds to repay $15m to bondholders.
In addition, Continental Coal had debt finance at an asset level totaling $25m with Absa Capital, a South African bank, and deferred revenue owed to trading company, EDF that it could not repay.
New management, led by a former Continental Coal director, Peter Landau, provided a $5m bridging loan and then sought a rights issue, subsequently increased to A$35m, and which was eventually supported by shareholders on September 30.
In an announcement today, Continental Coal said it had received offers from third parties interested in acquiring its 74% interest in South African subsidiary which
“… provides for the satisfaction of key debts… ” at the parent and subsidiary level.
“The offers would leave the company with excess cash reserves at its disposal and the ability to pursue new opportunities that have been presented to it,” Continental Coal said in its announcement.
Details regarding the offer and the possible options for shareholders in Continental Coal would be published on or before October 14, the company said.
In addition, Continental Coal said that it was seeking legal advice on whether it could pursue one of three routes of either repaying the proceeds of the rights issue to shareholders, or ask shareholders to continue to remain invested in Continental Coal after selling the South African mines. The third option was that Continental Coal could make further calls on shareholders.
Continental Coal produced about 2.2 million tonnes of saleable coal in its last financial year and was hoping to achieve the same output with Penumbra replacing production from the nearly exhausted Ferreira mine.
Continental has one other operation mine in Vlakvarkfontein and a ‘company-making’ project in De Wittekrans, a proposed 1.6mpta mine with a significant export portion but requiring some $120m in capital.
