[miningmx.com] — ONLY the blessing of South Africa’s minerals and energy department stands in the way of the relisting of Yomhlaba Resources on the JSE’s main board under the new name, SA Coal Mining Holdings.
This follows the passage of 13 resolutions at the July 1 (Saturday’s) extraordinary meeting. The granting of a R108m loan facility by Standard Bank, another precursor to the relisting of the coal company, is believed to be imminent.
It will then be the first JSE-listed company controlled by the Royal Bafokeng nation, a status confirmed by the appointment of Royal Bafokeng nominee Thabo Mokgatlha – who also represents the community on the board of Impala Platinum – as chairperson in place of company doctor Karl Gribnitz of Gandalf Trust, who will serve as temporary CEO for six months.
Responding to my criticism that the reconstruction has taken an inordinate time (June 28), Gribnitz said it was the most complex deal he’s ever been involved in, if not the most complex ever in South Africa. And to the extent that delay was caused by the addition of Umlabu colliery to the original transaction to acquire Ilanga Coal Mines, Gribnitz said the extra value more than justifies it.
He points out that SA Coal Mining will also have a 500,000 tonnes/year of export quota through the Richards Bay Coal Terminal.
In fact, while Ilanga is an open pit with a nominal life expectancy of only two years, Umlaba has opencast and underground operations and a nominal life of 19 years. This is a much stronger basis on which to fulfil the ambition of exploring new deposits and acquiring mines from smaller operators who lack capital and/or skills.
And as Ilanga and Umlaba will be operated on a cost per tonne basis through a company called Mkhulu Resources by coal veteran Pieter Swanepoel, who was last year named Xstrata’s top coal GM worldwide, Gribnitz reckons the operating risk is minimised.
After the restructuring, the Royal Bafokeng will control at least 65% of SA Coal Mining’s equity, or 260m of 400m issued shares, through Royal Bafokeng Capital (Pty). This in turn is controlled by Royal Bafokeng Holdings (Pty), with 50.1%; Gribnitz’s Strider Holdings (Pty) owns the other 49.9%.
Conversion of a R26m loan from Royal Bafokeng Capital could lead to the issue of up to a further 43.3 million shares, taking the stake to 68.4%, giving ample scope to issue more shares for acquisitions without jeopardising the company’s BEE status.
Yomhlaba’s original problems were caused by the cancellation by BHP Billiton of a contract to supply it with coal. I’m told that a resumption of talks to resolve this dispute could also be imminent.
Just what all these developments will make a relisted Yomhlaba/SA Coal worth remains to be seen. Yomhlaba’s last price before it was suspended was 20c, which is equivalent to R2.00 after the consolidation. But the indicative price of 60c used more than once for the purposes of the reconstruction, even if deliberately conservative, suggests that historic shareholders may have to brace themselves for a loss of value.
Still, it seems that SA Coal Mining wants to play the same sort of consolidating role that is generally thought to be needed in the platinum mining sector, too.
The potential rewards may not be as great, as coal has a lower value than platinum and is cheaper to mine; but it could nevertheless be a lucrative niche that nobody else could fill so well.
Incidentally, I’m told that the reason the meeting was held on a Saturday – the first such occasion any of us could remember – is that some of the agreements had to be signed by June 30, but the maximum possible time was needed to comply with the formalities and prepare the documentation. That really confirms my remarks on how long its all taken, doesn’t it?
