HomeEnergy MineralsCoAL seeking Exxaro buy-in within months

CoAL seeking Exxaro buy-in within months

Johannesburg, South Africa — 13 March 2012 – COAL of Africa (CoAL) “’ an emerging developer and producer of high-quality thermal and coking coal “’ is hoping to secure Exxaro Resources’ buy-in in the development of the Makhado project, over which the diversified miner holds a 30% option, within months.

Miningmx reports that CoAL is preparing to start with the development of Makhado once all the regulatory hurdles have been cleared, and is currently in negotiations with Exxaro over the option that the group acquired in April 2009.

Reporting CoAL’s interim figures for the period to end-December, CEO John Wallington said the results of Makhado’s definitive feasibility study had been presented to Exxaro’s board.

“I haven’t picked up any reluctance from their side to take part,” said Wallington when asked about the probability of a deal, adding that he expected significant progress in negotiations over the next two to three months. “I don’t see this investment from Exxaro and/or another party not happening,” he added.

The first phase of Makhado is envisaged to produce 2.5Mtpa, which could eventually be expanded to 5Mtpa. CoAL’s CFO Wayne Koonin said the mining right was expected to be finalised by year-end, after which construction would take between 18 to 24 months.

Wallington said the pending acquisition of Rio Tinto’s Chapudi coal assets would give the company far more flexibility and options as it aims for the 5Mtpa target. The Chapudi assets are contiguous to the Makhado project.

CoAL’s enthusiasm for Exxaro’s involvement is quite clear. “They understand coking coal,” Koonin said, adding that Exxaro’s empowerment credential, technical expertise and access to capital contributed to the lure of the diversified miner’s involvement.

Another strategic transaction that CoAL hopes to finalise soon is an off-take agreement with ArcelorMittal SA (also a shareholder in CoAL), which has been dragging on longer than initially thought.

Wallington said he expected to make significant progress in this regard, also within the next three or so months, while Arcelor tested the various coal samples delivered by CoAL to the steelmaker’s Newcastle and Vanderbijlpark plants.

In addition, CoAL would embark on an international product road show in March and April for both Makhado and the Vele colliery.

Following the lifting of the suspension of Vele’s Integrated Water Use Licence in October, CoAL completed the building of infrastructure and started production at the colliery in December.  Wallington said he expected first sales in the June-quarter.

Source: Miningmx. For further details click here.