Media coverage

10 March 2014

CoAL narrows headline loss as it ‘focuses on selling noncore assets’

Source: www.bdlive.co.za
Author: Allan Seccombe

COAL of Africa (CoAL) reported a reduced loss in the first six months of its 2014 financial year as it focused on selling noncore assets and securing buyers of coal from its Vele mine.

CoAL reported a loss of $46m for the six months to end-December 2013 compared to a loss of $118m a year earlier. The loss includes a number of one-off items such as the impairment of its Mooiplaats colliery for $16.5m and a net foreign exchange loss of $12.6m.

The headline loss per share for the period, which excludes exceptional items, fell to 2.85 US cents compared to 7.95c before.

CoAL received R80m this month from the sale of its Woestalleen colliery and it is engaged in talks to sell its Mooiplaats mine, which is under care and maintenance. Both mines are thermal coal operations.

CoAL will also sell its shares in Bushveld Minerals as well as its Holfontein project. These sales should be concluded by the end of December, CEO David Brown said.

The disposal of noncore assets will generate funds to repay a R210m Investec loan of which R107m has been used, he said. The sales will also free up cash CoAL has in rehabilitation funds of these assets.

CoAL will issue 20-million options to Investec, which are exercisable at R1.32 each before October 2018.

There are some heavy demands on cash for the company, with a $30m payment to Rio Tinto due this year. CoAL is in talks with Rio Tinto over the timing of the payment "in order to match the company’s available cash resources".

CoAL has to raise R450m to modify its processing plant at Vele to secure an offtake contract with ArcelorMittal SA, the country’s largest steel maker.

CoAL is also engaged in renegotiating its take or pay port obligations with Grindrod and this is expected to be completed by the end of June.

CoAL will have to fund the development of coal operations at its Makhado project, with the new-order mining right for the project expected before the end of December. It will take 26 months to build a mine, starting in 2015 if the company can raise the funds.