[miningmx.com] — CYRIL Ramaphosa’s Shanduka Resources is to acquire 51.9% control of coal mining and services group Sentula through injecting its 30% stakes in Kangra Coal and Shanduka Coal into Sentula in a deal worth R2.1bn.
Particular significance of the deal is that this is the first time Shanduka has listed some of its mining assets through a vehicle which it will control.
Sentula is to be renamed Shanduka Mining – “or such other name as may be approved by Shanduka group”.
The deal looks good news for embattled Sentula which has struggled from one crisis to another since massive fraud was uncovered in its accounts early in 2008. The company was also plunged into a scandal over alleged insider trading.
Not only does Sentula acquire Shanduka as its empowerment partner but, through Shanduka, the company will also be aligned with commodity trading powerhouse Glencore, which owns the other 70% in Shanduka Coal.
Kangra is the coal group founded by the late Graham Beck who brought in Shanduka as an empowerment partner. The other 70% stake in Kangra is now owned by Gas Naturale SDB SA.
Key asset owned by Kangra is its 2.3% shareholding in the Richards Bay Coal Terminal (RBCT) entitling it to around 2 million tonnes (mt) of annual RBCT export quota, depending on the overall throughput achieved by the terminal.
Shanduka’s operating coal mines are the Graspan, Middelburg Townlands and Springlake collieries. The group’s run-of-mine (ROM) production totaled 9.1mt of coal for calendar 2010 from which it generated about R2.2bn in revenues and earnings before interest, tax and amortization (EBITA) of R295m.
Kangra produced 4.1mt ROM during calendar 2010 and generated R1.6bn in revenues as well as R726m in EBITA.
According to Sentula CEO Robin Berry, “this transaction will transform Sentula primarily from a mining services provider into a mid-tier coal mining business.
“The combined assets in the new group will be treble the size of our previous coal assets and it will create further complementary opportunities to enable growth in contract mining services.”
“The merged entity will be able to leverage off Shanduka’s brand and high quality institutional backing and it will be competitively positioned to act as a catalyst in the consolidation of the SA junior coal mining sector.”
Sentula shares were unchanged at 289c in trading on the JSE after release of news on the deal on Thursday afternoon.
