Johannesburg, South Africa — 05 October 2012 – A unit of Beijing Haohua Energy Resource Company Limited has offered to inject US$100 million into Coal of Africa (CoAL), after diversified miner Exxaro chose not to exercise its option to acquire a 30% stake in CoAL’s Makhado coking coal project.
Revealing this in a statement released here, CoAL pointed out that the equity funding offer from Haohua Energy International (HEI) came in the face of the company revealing that its full-year pre-tax losses had tripled because of higher labour and capital costs.
Reuters reports that the proposed deal would be executed in two stages, allowing HEI to subscribe for up to US$100 million of ordinary shares in CoAL at 25 pence per share. After the deal, which is subject to a number of conditions, HEI will own 23.6% of CoAL.
“The placement would expedite the development of CoAL’s projects and lead to the formation of a strategic partnership, as well as provide direct exposure to the world’s largest coking coal market,” CoAL chief executive John Wallington said in a statement.
HEI’s parent is a Beijing-based coal producer and the largest exporter of anthracite coal from China.
CoAL has two operating collieries in South Africa, producing thermal and coking coal for the domestic and export markets, and other projects in development.
The mining company, which is also listed in London and Sydney, said adjusted operating pre-tax losses for the year to the end of June widened to US$32.8 million from US$10.1 million the previous year.
The jump had been due to higher labour costs given increases in mining activity at its Mooiplaats colliery, once-off capital raising project costs and the exclusion of an asset sold during the financial year.
Revenue was down to US$243.8 million from US$261.4 million, with coal sales hit by a 27% drop in export coal spot prices.
CoAL’s shares in Johannesburg are down 71% so far this year, compared with a nearly 12% jump in the All-Share index. The stock plummeted nearly 18% last week after some of the company’s staff at its Mooiplaats colliery went on a strike over wages.
Source: Reuters Africa. For more information, click here.