[miningmx.com] – KEATON Energy, the R375m coal junior, is to bid R182.4m (A$19.7m) for control of Xceed Resources in an effort to meet its strategic goal of five million tonnes a year (5mtpa) of production.
The principle aim of the proposed transaction is to mine Moabsvelden, an open castable coal project adjacent to Keaton Energy’s Vanggatfontein mine near Delmas in South Africa’s Mpumalanga province. The project, for which Xceed has a mining right granted to it by the South African government, has 30.7 million tonnes in proven coal reserves and a total of 43.9 million tonnes of total reserves.
Xceed has a 74% stake in Moabsvelden. It also has interests in two other projects – Bankfontein and Roodepoort – which together with Moabsvelden contain a total of 114 million tonnes of resources.
“A positive for Moabsvelden is that it will be entirely open castable, with a low stripping ratio and a mine life in excess of 15 years,” said Keaton Energy in an announcement to the JSE this morning.
“The Scheme forms part of Keaton’s strategy to grow into a 5+ million tonnes per annum producer of diversified coal products,” Keaton Energy added. Shares in Keaton Energy had gained just over 15% on the JSE.
The offer has the support of Xceed’s board, the principles of which also comprise up to 57% of its shareholder base. Details of the scheme of arrangement will be sent to shareholders by late October. The deal has been given six months to succeed.
In order to avoid dilution, Keaton Energy’s 23.92% shareholder, European oil and commodity trader, Gunvor, is to fund between $10m and $18m (equal to R102.6m and R184.6m) of the deal of which about $5.8m will be in shares and the balance in cash settled through an offtake agreement from Moabsvelden.
In June, Keaton Energy CEO, Mandi Glad, said the company had been aggressively chasing down new acquisitions in order to reach its 5mtpa target, the first of which was the Mooiklip prospect, adjacent to Vaalkrantz.
“Mooiklip is about 30km from Vaalkrantz and contains an estimated 4.5mt of coal with qualities similar to Vaalkrantz. But these amounts remain to be confirmed in the 2014 financial year,’ said Glad at the time.
A total of 16 projects had been identified as possible acquisition targets of which five were “already off the table’ owing to price or technical factors,’ Glad had said.
Another four projects were “currently on the go and we hope to report back on those in the current financial year,’ she said.
Keaton Energy produced 3.3mtpa run-of-mine in its 2013 financial year, a period which proved difficult in which it posted a total loss of R132m which compares to a profit of R112m in the 2012 financial year. Cash reserves also fell steeply.
However, for the first quarter of the current financial year, Keaton Energy reported a 48% improvement in production at Vanggatfontein, delivering some 526,034 tonnes of washed thermal coal to Eskom.
