MINERGY, a coal development firm operating in Botswana’s Mmamabula coalfields, has decided not to list in Johannesburg, preferring instead a more expensive UK listing owing to negative sentiment regarding South Africa.
Andre Bojé, CEO of Minergy, said that while there was no specific risk posed to the company’s business by potential regulatory change in South Africa’s mining industry, shareholders were nonetheless uneasy at the prospect of a Johannesburg listing.
“It shows you how investment feeling about South Africa has turned negative,” said Bojé, previously founder and CEO of the Johannesburg-listed coal miner, Wescoal Holdings.
“It is more expensive to list in London, but we will raise a small amount of cash to cover the listing costs. We can always do a fast-track listing in Johannesburg once we have an established presence in the UK,” he said. Minergy is primarily listed on the Botswana Stock Exchange, but liquidity is low in that market.
There was also a lot of familiarity and comfort among UK investors in Africa (non-South African) mining investments, said Bojé.
Bojé said Botswana-based pension funds were likely to take more shares for cash in Minergy imminently. This would raise about P60m equal to R78m and take total funds raised to some P135m (R175m) – enough to build Minergy’s Masama thermal coal mine. The mine would have saleable coal of about 1.2 million tonnes a year.
Most of the thermal coal production would be exported to South African industrial consumers in North West province and the Western Cape where Minergy had a competitive advantage in terms of freight costs.
Bojé was appointed to lead Minergy’s development work at Masama in 2016 by Minergy executive director, Claude de Bruin, a South African investor based in Australia. Bojé’s remit was to give focus to Masama’s the footprint of which was originally estimated to be some 700 square kilometres with an estimated 2.8 billion tonnes of export quality coal.
Although scoped down from that level, the resource was still large enough to eventually supply multiple markets. “The size of the resource also supports scalable production, presenting an opportunity to provide export coal to traders who supply India, China, and other areas of Asia, as well as Europe, should international coal prices remain stable,” said Minergy in a press statement last week.