Universal Coal has completed the acquisition of its third operating colliery ahead of schedule.
The company has acquired the assets that comprise the North Block Complex (NBC) from Exxaro for an adjusted purchase price of R93 million.
“Early completion of the NBC acquisition will enable Universal Coal to benefit from additional operating months in the current reporting period,” comments CEO, Tony Weber.
“It will also enable us to apply our business and operating model to the North Block Complex and to restore production levels achieved historically.
“The inclusion of the NBC in the company’s portfolio of assets will significantly increase our projected saleable product pipeline by adding an additional production of up to 2.7 Mtpa’s to the company’s production outlook.
“The acquisition of the fully operating colliery gives us immediate production and cash flow benefits,” he adds.
Universal Coal was conservative when including the NBC’s contribution in the market guidance that was provided on 10 October 2018.
Owing to the uncertainty on the timing of the transfer of ownership, only 900 Kt of saleable product was included in the forecast, with production from the colliery being included from January 2019 onwards.
Short-term production from the NBC will be mainly domestic thermal coal, with the more lucrative, export-quality product being included once the Paardeplaats portion has been fully regulated for mining activities.
“Given that we have completed this transaction well ahead of schedule, Universal Coal is on track to deliver and exceed the estimated forecast earnings before interest, tax depreciation and amortisation.
“We are exceptionally well placed to deliver on production and sales volume commitments for 2019.
“We will provide regular shareholder updates on developments at the NBC as well as providing coal reserve and earnings guidance,” he explains.