ANNOUNCEMENT 31 October 2013

Transcription

1 Coal of Africa Limited Coal of Africa Limited (Incorporated and registered in Australia) Registration number ABN ISIN AU000000CZA6 JSE/ASX/AIM share code: CZA ("CoAL or the "Company" or the "Group") ANNOUNCEMENT 31 October 2013 REPORT FOR THE QUARTER ENDED 30 SEPTEMBER 2013 Repositioning of CoAL on track Coal of Africa Limited ( CoAL or the Company ) which operates in South Africa, together with its subsidiaries, hereby provides its operational report for the ended 30 September All figures are denominated in United States dollars unless otherwise stated. A copy of this report is available on the Company's website, Salient Features No lost time injuries recorded during the (FY2013 Q4: three) with increased focus on safety during repositioning processes and lower activity. Makhado Project received Environmental Authorisation in terms of NEMA and Environmental Impact Assessment Regulations from LEDET. Run of mine coal production increased slightly to 202,910 tonnes from the previous s 188,921 tonnes. Export coal sales from the Matola Terminal decreased from the previous s 136,372 tonnes to 56,799 tonnes due to the exhaustion of export quality coal stockpiles during the June 2013 period. Corporate and Financial Features Repayment of the remaining $12.5 million of the Deutsche Bank facility with only $1.1 million of the Investec derivative facility outstanding at the end of the. Completion of the regulatory Section 189 consultation process resulting in the placement of the Mooiplaats Colliery on care and maintenance and the reduction of corporate expenses. Suite 8, 7 The Esplanade, Mt Pleasant, Perth WA 6153, Australia, Tel: , Fax: , perth@coalofafrica.com ACN ZA: 2 nd Floor, Gabba Building, The Campus, 57 Sloane Street, Bryanston, Johannesburg, South Africa 2021, Tel: , Fax: , admin@coalofafrica.com David H.Brown Executive Chairman, Michael G. Meeser Chief Financial Officer Nonexecutive directors: Peter G. Cordin, Khomotso B. Mosehla, David J. K. Murray, Bernard R. Pryor, Rudolph H. Torlage

2 The Company s cost cutting processes have been completed and formal processes for the disposal of noncore assets continued during the period. Settlement of litigation brought against CoAL by Coria (Pkf) Investments, Motjoli Resources Proprietary Limited & Motjoli Resources Advisory Services cc and Ferret Mining & Environmental Services. Available cash of $9.6 million at end of period. Post period highlights R210 million (approximately US$21.4 million) 18 month credit facility secured from Investec Bank Limited. Operations at the Vele Colliery wound down in anticipation of the plant modification in Commenting today, Mr David Brown, Executive Chairman said: The Company has made significant progress in the execution of its enhanced turnaround strategy which will allow it to concentrate on the next phase of the process. This entails the construction of the modified plant at Vele and the move to full production. The repayment of the Deutsche Bank facility during September 2013 and the conclusion of the Investec loan in October 2013 ensures CoAL is well placed to complete its restructuring programme. Management is confident that the overall strategy adopted will see the development of the Company s significant Limpopo coking coal assets, for the benefit of all stakeholders. In addition the company has made excellent progress in resolving various legacy issues. QUARTERLY COMMENTARY Operational Summary and Market Update As a result of the Mooiplaats Colliery being placed on care and maintenance sales of middlings coal to Eskom, the state power utility decreased from 202,581 in the June 2013 to 141,798 tonnes in the current period. Sales of export quality coal decreased from the previous s 136,372 tonnes to 56,799 tonnes during the September 2013 as a result of the run of mine ( ROM ) stockpiles at Woestalleen being exhausted during the previous and decreased production from Mooiplaats. Pressure on indexlinked RB1 export quality thermal coal prices continued, declining from $77 per tonne at the end of June 2013 to $73 at the end of September Lower coal prices were partially offset by the weakening of the South African rand with average exchange rates declining from ZAR9.47 in the June 2013 to ZAR9.98 in the September Woestalleen Complex Witbank Coalfield (100%) The Woestalleen processing facility recorded no lost time injury during the (FY2013 Q4: one LTI). During the CoAL progressed the sale of the Woestalleen processing complex and the undeveloped Opgoedenhoop New Order Mining Right ( NOMR ) and both transactions require Ministerial consent in terms of Section 11 of the Mineral and Petroleum Resources Development Act ( MPRDA ). The Company Page 2

3 made good progress in satisfying the suspensive conditions for the disposals including lodging the consent applications. The Company continued to reprocess discard dumps at the Woestalleen site during the, producing 99,257 tonnes for sale to Eskom (FY2013 Q4: 80,498 tonnes). In terms of an interim agreement with the purchaser, Woestalleen processed 71,565 tonnes of third party ROM coal on a cost recovery plus margin basis. Mooiplaats Colliery Ermelo Coalfield (100%) The Mooiplaats thermal coal colliery ( Mooiplaats Colliery ) recorded no LTIs during the period (FY2013 Q4: two LTIs). The colliery continued to produce Eskom middlings coal until the Section 189 restructuring process was completed in early September 2013, resulting in agreement with stakeholders that the mine be placed on care and maintenance. The shorter production period resulted in ROM coal production decreasing to 75,146 tonnes (FY2013 Q4: 179,603 tonnes). Coal processed decreased from 178,856 tonnes to 80,037 tonnes and the colliery produced a total of 61,057 tonnes of middlings coal for Eskom (FY2013 Q4: 134,020 tonnes). The Company commenced with a formal disposal process in September 2013 and will aim to complete this process prior to the end of the calendar year. Vele Colliery Limpopo (Tuli) Coalfield (100%) The Vele coking and thermal coal colliery ( Vele Colliery ) recorded no LTIs during the (FY2013 Q4: nil LTIs). The Vele Colliery produced 127,764 tonnes of ROM coal during the September 2013, an increase from the previous s 9,318 tonnes which was affected by the suspension of operations due to the train derailment previously reported. The colliery processed 136,864 tonnes (FY2013 Q4: nil tonnes) of ROM coal during the producing 32,399 tonnes (FY2013 Q4: 89 tonnes) of export quality thermal coal. Production of semisoft coking coal for metallurgical coal trials was completed during the September 2013 and over 300 tonnes were sent to ArcelorMittal South Africa Limited ( AMSA ). This coal will be tested in AMSA s coke batteries and the results thereof are expected in the December Optimisation studies for the Vele Colliery were completed during the and in October 2013 the Company announced that operations at the Vele Colliery will temporarily cease pending the modification of the plant during CY2014. Makhado Coking Coal Project Soutpansberg Coalfield (100%) The Makhado coking coal project ( Makhado Project ) recorded no LTIs (FY2013 Q4: no LTIs) during the. Page 3

4 During the the Company received Environmental Authorisation in terms of the National Environmental Management Act ( NEMA ) and Environmental Impact Assessment Regulations from the Limpopo Department of Economic Development, Environment and Tourism ( LEDET ) for the Makhado Project. This is a significant milestone towards achieving full regulatory compliance for the project and the Company is working on finalising the Black Economic Empowerment ( BEE ) aspects required in terms of the South African legislation prior to the granting of a NOMR. Greater Soutpansberg Project (MbeuYashu) (74%) The MbeuYashu Project recorded no LTIs (FY2013 Q4: no LTIs) during the period. During the period the Company commenced the Environmental Impact Assessment and Environmental Management Programme processes for the Generaal and Chapudi projects and continued with the process for the Mopane project. These processes are expected to be completed in early Cash Position Cash outflow from operations for the period reduced from $18.4 million in the June 2013 to $8.1 million in the current due to the reduction in activity at the Company s collieries. During the CoAL repaid the outstanding Deutsche Bank facility liability $12.4 million (FY2013 Q4: $11.5 million) and $0.7 million (FY2013 Q4: $1.1 million) of the Investec derivativebacked finance facility. Expenditure on exploration and evaluation in the December 2013 is expected to be $2.7 million and includes expenditure for public participation programmes for the MbeuYashu projects. Approximately $2.4 million will be spent on development and includes costs associated with Vele. Estimated production costs for the three months of $41k relate to net expenses at the Mooiplaats and Woestalleen operations while administration expenses of $2.5 million will be incurred to cover head office costs. The estimated December 2013 cash outflows included in the 5B report attached to this commentary, should be seen in the context that revenue from the sale of coal or noncore projects has not been taken into account neither has the ability to draw down on the announced Investec funding Strategic and Corporate Update Good progress is being made on all elements of the turnaround strategy and includes the closure of the loss making Mooiplaats Colliery, advancement of the disposal of the Woestalleen complex and the completion of studies on the potential expansion of the Vele Colliery. The Company also successfully completed cost saving measures at its corporate head office and settled the following litigation matters: Withdrawal of the legal action instituted by Motjoli Resources Proprietary Limited & Motjoli Resources Advisory Services cc suing the Company for 4,750,000 fully paid up ordinary shares in CoAL or, R95.5 million ($9.7 million) with interest. Settlement of the action instituted by Coria (Pkf) Investments 14 Proprietary Limited who claimed damages of R4.3 million ($0.4 million) from wholly owned NuCoal Mining (Pty) Ltd. In terms of the settlement, NuCoal will pay Coria R0.9 million ($0.1 million). Page 4

5 Settlement of the litigation instituted by Ferret Mining & Environmental Services (Pty) Ltd in relation to their historic shareholding in Mooiplaats Mining Limited, the intermediate holding company of the Mooiplaats Colliery. In terms of the settlement, Ferret will be reinstated as 26% shareholders in Mooiplaats Mining and will dispose of their interest should the colliery be sold. Ferret will receive a maximum of R10.1 million ($1.1 million) should Mooiplaats be sold in the next 18 months or, a maximum of R15.0 million ($1.6 million) if it is sold thereafter. The reinstatement of Ferret ensures that the Mooiplaats Colliery complies with the BEE requirements stipulated in the MPRDA. Authorised by David Brown Executive Chairman 31 October 2013 For more information contact: David Brown Executive Chairman Coal of Africa Michael Meeser Chief Financial Officer Coal of Africa Celeste Harris Investor Relations Coal of Africa Tony Bevan Company Secretary Endeavour Corporate Services Company advisors: Jos Simson/Emily Fenton Financial PR (United Kingdom) Tavistock Chris Sim/George Price/Jeremy Ellis Nominated Adviser Investec Bank plc Charmane Russell/James Duncan Financial PR (South Africa) Russell & Associates or Investec Bank Limited is the nominated JSE Sponsor About CoAL: CoAL is an AIM/ASX/JSE listed coal exploration, development and mining company operating in South Africa. CoAL s key projects include the Vele Colliery (coking and thermal coal), the Greater Soutpansberg Project /MbeuYashu, including CoAL s Makhado Project (coking and thermal coal). Page 5

6 Rule 5.3 Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10. Name of entity Coal of Africa Limited ABN Quarter ended ( current ) September 2013 Consolidated statement of cash flows Cash flows related to operating activities 1.1 Receipts from product sales and related debtors Current Year to date (12 months) 20,742 20, Payments for (a) exploration & evaluation (b) development (c) production (d) logistics (e) administration (2,120) (4,981) (15,808) (1,424) (4,783) (2,120) (4,981) (15,808) (1,424) (4,783) 1.3 Dividends received 1.4 Interest and other items of a similar nature received Interest and other costs of finance paid (85) (85) 1.6 Income taxes paid 1.7 Other (provide details if material) Net Operating Cash Flows (8,056) (8,056) Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) 1,372 1,372 Net investing cash flows 1,372 1, Total operating and investing cash flows (carried forward) (6,684) (6,684) 30/9/2001 Page 1

7 1.13 Total operating and investing cash flows (brought forward) (6,684) (6,684) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc Proceeds from pending issues of shares* 1.16 Proceeds from sale of forfeited shares 1.17 Proceeds from borrowings 1.18 Repayment of borrowings (13,149) (13,149) 1.19 Dividends paid 1.20 Other (provide details if material) Net financing cash flows (13,149) (13,149) Net increase (decrease) in cash held (19,833) (19,833) 1.21 Cash at beginning of /year to date 28,922 28, Exchange rate adjustments Cash at end of 9,560 9,560 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current US$' Aggregate amount of payments to the parties included in item Aggregate amount of loans to the parties included in item Explanation necessary for an understanding of the transactions The balance in 1.23 includes all salaries and fees paid to directors. Noncash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest Page 2 30/9/2001

8 Financing facilities available Add notes as necessary for an understanding of the position. Amount available Amount used 3.1 Loan facilities 1, Credit standby arrangements Estimated cash outflows for next 4.1 Exploration and evaluation 2, Development 2, Production Logistics 4.5 Administration 2,471 Total 7,625 Reconciliation of cash Reconciliation of cash at the end of the (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Current Previous 5.1 Cash on hand and at bank 6,213 6, Deposits at call 3,347 3, Bank overdraft 5.4 Other (provide details) Total: cash at end of (item 1.22) 9,560 9,560 30/9/2001 Page 3

9 Changes in interests in mining tenements 6.1 Interests in mining tenements relinquished, reduced or lapsed Tenement reference Nature of interest (note (2)) Interest at beginning of Interest at end of 6.2 Interests in mining tenements acquired or increased Issued and quoted securities at end of current Description includes rate of interest and any redemption or conversion rights together with prices and dates. 7.1 Preference + securities (description) 7.2 Changes during Ordinary securities Total number Number quoted Issue price per security (see note 3) (cents) 1,048,638,613 1,048,638,613 Amount paid up per security (see note 3) (cents) 7.4 Changes during (a) Increases through issues (b) Decreases through returns of capital, buybacks Convertible debt securities (description) 7.6 Changes during (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options (description and conversion factor) 7.8 Issued during 7.9 Exercised during 7.10 Cancelled during 13,929,562 Exercise price See Note 6 Expiry date See Note 6 See Note 6 See Note 6 See Note 6 See Note 6 Page 4 30/9/2001

10 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed. Sign here:... Date:...31 October (Company secretary) TONY BEVAN Print name:... Notes 1 The ly report provides a basis for informing the market how the entity s activities have been financed for the past and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. 2 The Nature of interest (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. 6 Issued and Quoted Options as at 30 September 2013: 30/9/2001 Page 5

11 Number Issued Number Quoted Exercise Price Expiry Date Lapsed Since End of 818,500 3,000,000 2,500,000 1* 1,441,061 2,670,000 3,500,000 A$1.90 A$2.74 A$1.20 GBP0.60 A$1.40 ZAR7.60 GBP June November November November September February November 2015 *1 Option to subscribe for 50 million ordinary shares for 60 pence each between 1 November 2010 and 1 November 2014 as approved by shareholders on 22 April 2010 == == == == == Page 6 30/9/2001