Wescoal to buy minority shareholders in Moabsvelden ahead of project start up

WESCOAL Holdings, a Johannesburg-listed coal producer, is to buy shares held by a minority shareholder in Moabsvelden, a project in South Africa’s Mpumalanga province that it intends to build into a 1.5 million ton to 2 million ton (Mt) per year mine this year.

The company will offer R24.5m for an 18.2% interest in Neosho, a company which held Keaton Energy’s stake in Moabsvelden. Wescoal bought Keaton Energy in 2017. A further R24.5m will be paid to the minority shareholder in compensation for future production from Moabsvelden. Negotiations to buy out the remaining shareholders in Neosho are also underway, Wescoal said in an announcement.

Wescoal is currently negotiating with potential customers, including Eskom, for coal offtake and/or supply agreements,” said Wescoal on May 7 regarding Moabsvelden.

Moabsvelden is a satellite of Vanggatfontein, Wescoal’s flagship mine. Vanggatfontein will also supply processing capability to the project. “The asset [Moabsvelden] is fully permitted and the mine development plan is an opencast project with the aim of producing first coal during the second half of this calendar year,” said Wescoal.

The company also announced that coal mining, handling and processing activities resumed at Vanggatfontein as of May 20 following protests earlier in the year which resulted in damage to property and the dismissal of over 200 contractors. The employees were protesting following a change in mining contractor at the mine.

“The ramp-up to full production profile, subject to no further disruptions, is anticipated to be achieved in early June 2019, two weeks ahead of the previously communicated schedule,” said Wescoal.