David Brown ‒
Johannesburg, South Africa --- 07August 2012 - Embattled coal exploration and production company Coal of Africa Limited (CoAL) has continued its efforts to shore up its balance sheet, issuing US$44.8 million in shares, and reveals that it has revamped its board announcing the appointment of former Impala Platinum CEO David Brown as its chairperson.
Miningmx quotes Brown, who has wasted no time accepting a new challenge in a mining industry he recently described as tiring, as saying that all options were on the table in moving CoAL beyond its current position as a struggling junior mining company. Brown announced his resignation from Implats in January and left the company at the end of June.
“Our key focus will be to re-establish shareholder value and to facilitate this, all strategic options will be assessed,” Brown said. “The company is at the critical stage of moving beyond being a junior miner,” he said.
Brown’s appointment is part of a clean sweep at CoAL in consultation with shareholders, in which long-standing chairperson, Richard Linnell, who served on CoAL’s board since 2001, is to leave. Simon Farrell, once CEO of CoAL, and other non-executive directors, Steve Bywater and Mikki Xayiya, have also left the board with immediate effect.
Former Anglo American executive, Bernard Pryor, has been appointed a non-executive director of CoAL.
It is unclear whether CoAL’s existing executive management motivated and pushed for board changes, or whether the alterations to key executives was at the bequest of shareholders.
Regardless, the changes serve notice that CoAL intends reversing its perilous share price decline in which CoAL’s value has fallen 60% since March. Shares in CoAl increased 3.56% on the JSE and traded last at R3.45/share.
In terms of CoAL’s latest efforts to finance its pipeline of coking coal projects, located in the Soutpansberg coalfields of the Limpopo province, the company is to issue about 17% of its share capital, equal to some 115.5 million shares. CoAL said the issue price was at a 1.96% discount to its ‘middle market’ price of 25.5 pence on the UK’s Alternative Investment Market (AIM).
CoAL said in June quarter results last week that it needed a further US$15.7 million to bridge a funding shortfall partly owing to coal price weakness. CoAL received US$87/t for coal in the quarter against prices of US$110/t in the March quarter.
In July, the company unveiled an equity and debt arrangement with South African bank Investec for some US$58.7 million which replaced an existing US$40 million facility with JP Morgan. The balance sheet distress provides evidence that CoAL needs the support of a major partner to help its transition from a minor thermal coal producer to a well positioned coking coal exploration and production firm.
The proceeds of the share issue will be used to finance the continuing ramp-up of CoAL’s Vele colliery, pre-mining right capital expenditure at the Makhado project and additional drilling at some of CoAL’s other exploration properties.
Source: Miningmx. For more information, click here.