[miningmx.com] – LONTOHCOAL, the company that enraged senior ANC
figures after allegedly failing to live up to investment promises, is hoping to raise
R360m, primarily from Asian and west African investors.
In a presentation published on LontohCoal’s website, the company says it hopes to
issue 30 million shares at a price of R12/share, nearly half that LontohCoal says the
company is worth. The valuation is based on a discounted cash flow calculation which
sees revenue rising from $1m in 2014 to $7m in 2023.
Tshepo Kgadima, president and CEO of the unlisted coal company, said the funds
would be used to secure six million tonnes a year of export entitlement through
Richards Bay Coal Terminal (RBCT), as well as pay the costs associated with a
planned $1bn listing of the company on the Hong Kong Stock Exchange.
Kgadima’s plans, however, have drawn criticism because production that would be
freighted to RBCT is not owned by the company, while the document used to support
the capital-raising was not “a registered prospectus’.
“It’s certainly not a registered prospectus while the Kwasa Colliery near Piet Retief is
or was in business rescue,’ a source who has been monitoring LontohCoal’s activities
told Miningmx. Kwasa is one of the properties from which LontohCoal hopes to secure
coal.
LontohCoal last year shipped anthracite to Ethiopia using material from Kwasa, but the
colliery is neither owned nor operated by Lontoh. Nor is the anthracite production in
KwaZulu-Natal owned by LontohCoal. This is the so-called Hlobane View Colliery which
has been owned by a number of parties and has not been mined since the early
Nineties.
The other source of production is third party purchases, an activity that Kgadima said
was “the way forward’ for emerging coal producers.
“The future of coal production from Mpumalanga province is blending coals. In that
regard we have to become a consolidator of properties, buying coal from previously
disenfranchised operators,’ he said of LontohCoal’s plans to buy and export third party coal production.
As for export entitlement through Richards Bay, Kgadima said capital raised would be used to secure a portion of the expansion planned by Richards Bay Coal Terminal
(RBCT). It said in November last year that it intended to grow to 110Mtpa from the
current 91Mtpa capacity.
In January and April last year, it was reported in City Press, a newspaper in
Johannesburg, that Kgadima’s LontohCoal had fallen foul of its investors. The investors
included senior people in the ruling African National Congress (ANC), as well as top
South African businesswomen, Wendy Luhabe. They claimed the company had duped
them of millions of rands.
The names of these high profile people were allegedly used to lure more people to
pump money into LontohCoal with a promise of huge returns on the Hong Kong Stock
Exchange, City Press said. They were particularly angry as LontohCoal didn’t own any
of the mines from which it was claiming production. The claims were refuted by
Kgadima.
A major part of LontohCoal’s valuation is its part in developing the 22 billion tone
Lubimbi coal prospect in Zimbabwe. Miningmx reported in the past that rights to the
prospect were subject to dispute. Sable Mining, a UK-listed company, said it owned a
joint venture with Zimbabwe’s Independence Mining – a claim Miningmx was able to
verify. “Sable is our partner with a 49% stake in the project,’ said Peter Mutsinya,
technical director of Liberation Mining in April last year.
Kgadima said LontohCoal had legal rights to the prospect. “There’s no legal reason to
doubt our rights. The amount of work we’ve already done in Zimbabwe and the plans
that we have also sets us apart from our rivals,’ Kgadima said.
