[miningmx.com] – KEATON Energy, the Johannesburg-listed coal producer, has changed the structure of its proposed R182m takeover of Australia’s Xceed Resources following a R130m capital injection from Investec Bank which gives the coal producer more financial flexibility.
In terms of the new structure, Keaton will sell less coal to Gunvor, a development that CEO, Mandi Glad, said was wholly motivated by the company. “We are still close to Gunvor but we have more flexibility in the system following the loan from Investec,’ said Glad.
As before, Gunvor will still buy 32.6 million shares in Keaton increasing its holding to 34.99% from 23% previously and raising R57.7m.
Gunvor first established a beachhead in Keaton after equity-financing the acquisition of 74% in Leeuw Mining & Exploration, a transaction completed in early 2012. Leeuw Mining owned the Vaalkrantz anthracite mine situated in KwaZulu-Natal province.
However, Gunvor will now only subscribe for $4m worth of Keaton Energy coal compared to $12m as set down previously. This will give Keaton more price optionality.
Gunvor will be hoping that Keaton continues its share price recovery under Glad. When it financed the Leeuw Mining deal, shares in the coal producer traded at R4.50/share. The latest share subscription is at R1.77/share. Shares in Keaton have increased 17.13% in the last year.
The switch in funding structure means that the proposed takeover of Xceed would take longer than first proposed. The Johannesburg Stock Exchange has allowed Keaton an extension to publishing its circular to shareholders which must now be delivered before December 24.
The delay has also resulted in the payment of certain operational expenses and working capital to Xceed to the tune of some A$350 000 or R3.3m.
Keaton’s primary interest in Xceed is its 74% stake in the Moabsvelden project, a property with 44mt coal in proven reserves, and situated close to Keaton’s flagship Vanggatfontein operation.
Glad said operating Moabsvelden would be like “a satellite’ pit of Vangatfontein as the two mines would share infrastructure such as the washplant.
As a result, it would be cheaper for Keaton Energy to build the mine – estimated at about R240m – than Xceed, said Glad. Moabsvelden will be entirely open castable, with a low stripping ratio and a mine life in excess of 15 years, Glad said.
The acquisition is in terms of Keaton Energy’s strategy to grow coal production to 5mtpa. It produced 3.3mt in its 2013 financial year.
