London Mining moves into SA coal market
August 11, 2008
Releasing a statement to this effect here, the company confirmed that it had reached agreement with Delta Mining Consolidated (Pty) Ltd (DMC) to subscribe for up to 50.5% of DMC subsidiary DMC Energy (Pty) Ltd (DMC Energy) for a total of up to US$120 million (R900 million). This would be implemented in staged payments, with the first such payment subject only to receipt of regulatory approvals in South Africa.
London Mining managing director Christopher Brown commented: “This acquisition will form the basis of London Mining’s new Coal Division, which we hope to grow rapidly in the future. We are particularly excited about entering into the coal business due to the strong demand from steel-making and power generation that has resulted in major price increases this year, in a similar manner to iron ore,” he added.
“We are very impressed with the professionalism of the DMC Energy management team and the assets they have assembled,” said Brown. “Rietkuil is being fast-tracked into production, and the other projects have substantial export potential through the new port in Mozambique.”
Following completion of an internal re-organisation by DMC, DMC Energy will own the following interests in South African mining assets:
70% of Ashante Mineral Resource (Pty) Ltd, which holds the Rietkuil coal project with an inferred in-situ resource of up to 288 million tonnes of coal.
30.35% (to increase to 69.65% upon completion of London Mining investment and DMC Energy re-organisation) of DMC Coal Mining (Pty) Ltd., which holds the Limpopo coal project and the Pixley Ka Seme coal and torbanite project. The potential resource of the Limpopo project is a 426 million-tonne in situ resource of metallurgical and thermal coal. The PKS project includes a coal deposit in excess of 234 million tonnes in situ, as well as 73 million tonnes of torbanite.
The London Mining statement went to say that DMC had also secured an irrevocable 40Mtpa port allocation through the future Porto du Bella Vista port in Mozambique, and was in the process of acquiring additional coal exploration assets in Botswana (70%), Zimbabwe (65%) and Swaziland (70%). These assets would be transferred to DMC Energy after registration was complete and all coal projects developed by DMC would be developed through DMC Energy.