Johannesburg, South Africa — 26 November 2012 COAL of Africa (CoAL) is making progress with the planned restructuring of its thermal coal mining operations in Mpumalanga, and the planned US$100 million investment by China’s Beijing Haohua Energy International is on track.
Stating this here, company CEO John Wallington said that plans to conclude the deal were progressing well, and CoAL was in the process of completing bankable feasibility studies for its Makhado project by the first quarter of 2013.
Miningmx reports that the Australian-based miner is ramping up production at its Vele coking coal mining operations near the Mapungubwe heritage site in Limpopo. It is also in the final stages of completing a bankable feasibility study on the Makhado metallurgical coal project.
Although SA has coking coal, lack of rail infrastructure to where it is located meant local steel makers ArcelorMittal SA and Evraz Highveld have traditionally obtained their metallurgical coal from Australia. Supplying coking coal locally has become CoAL’s biggest selling point.
The miner revealed last month it had signed a binding agreement with Haohua Energy of China, after diversified resources mining group Exxaro had elected not to exercise its right to acquire a 30% interest in the development of Makhado.
The firm recently raised debt through Investec and Deutsche Bank, and last month said it would sell US$100 million in equity to Beijing Haohua Energy, and that a US$20 million provisional payment had been made to an escrow account pending approval from Australia’s Foreign Investment Review Board.
One London-based mining analyst said yesterday that given the attractive assets on which the company was sitting, the strategy around how management intends to optimise its operations was key to the miner’s performance.
During the second half of the year, South African coal miners had to contend with lower export thermal coal prices as demand waned in China and India.
Rising operating costs at the Mooiplaats and Woestalleen collieries in Mpumalanga, also undermined CoAL’s share price. Its shares have fallen 69.5% to date since its highest peak on June 20, in what one mining analyst said was due to events at the markets as well as the uncertainty around the exact time the deal with Haohua Energy, which is subject to regulatory approval from China and Australia, would be concluded.
Source: Miningmx. For more information, click here.