Firestone turns down R1bn Tata Power bid

[miningmx.com] – FIRESTONE Energy has rejected an offer from Tata
Power Company to pump R300m into the Waterberg coal project, the proposed 10
million tonne/year (Mtpy) venture that Firestone shares with Sekoko Resources.

“This was a Firestone decision,’ said Jan Britz, CEO of Sekoko. “It undervalued the
project in their estimation.’

Firestone announced on March 7 that Tata Power offered R300m for a 30% stake in
the project; a financing option for Firestone to be paid in two tranches, and which
would have provided important interim financing for the company.

Tim Tebeila, Chairman of both Sekoko and, more recently, Firestone Energy,
said the Waterberg project had been valued at R1.6bn, whereas Tata Power’s
estimation was only R1bn.

“Since that valuation we have completed a definitive feasibility study and concluded a
10Mtpy supply agreement with Eskom. There needs to be value for that,’ said
Tebeila, who added that the ball was now firmly in Tata Power’s court.

“If they [Tata] want to up the offer, they can do that,’ said Tebeila. “We are
definitely not getting the value we want. Bear in mind we’ve also spent R400m
getting the project to its current level,’ he said.

Tata Power is one of several Indian power generation companies that have broadened
the scope of its coal procurement to include Africa amid a general shortage of coal
supplies globally. The understanding is that this may result in an improved offer for
the Waterberg coal project.

At the same time, however, Firestone’s balance sheet is not robust. It recently
arranged $2.2m in short-term debt through holders of the company’s convertible notes
which, not so incidentally, Firestone is scheduled to settle later this year.