Johannesburg, South Africa — MININGREVIEW.COM — 18 June 2010
Coal development company Coal of Africa Limited (CoAL) has announced that it is to raise US$81 million (R619 million) through the placement of shares.
Revealing this in a statement here, the company said 50 million ordinary shares, representing about 10.4% of CoAL’s existing issued ordinary share capital, had been placed to institutional and other investors. It intended to use the net proceeds of the placing to fund the Makhado bulk sample (about US$7.5 million) and the Makhado definitive feasibility study (US$6.5 million).
It said it would also use the proceeds to fund potential acquisitions contiguous to CoAL’s existing assets or existing inorganic growth opportunities, which amounted to about US$15 million and US$20 million respectively.
The statement added that the funds would also be used to repay an existing JP Morgan Chase Bank working capital facility of US$20 million, and for general working capital.
“CoAL has grown into a multi-site producer with a sizeable resource base, carefully considered logistics and a high quality and supportive investor base including its proposed off-take partners,” said CoAL executive deputy chairman Simon Farrell.
“We have a significant platform for production growth and an exciting development trajectory. Today’s equity placing will ensure that we have the right capital structure to deliver further material value for all stakeholders across our portfolio,” Farrell added.
Releasing a trading update, the company said it continued to consider a number of funding options, which included various forms of debt such as additional working capital facilities, equipment financing leasing, self-funding environmental rehabilitation guarantees, sale of non-core assets and equity.
“In order to fund the development of the Makhado Project and participation in any further potential expansions of capacity at the Matola Terminal, the board believes a combination of the above would be preferable,” Farrell said.