TIDMCZA
RNS Number : 6358B
Coal of Africa Limited
05 April 2017
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION (IN WHOLE OR PART)
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
Coal of Africa Limited
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000CZA6
JSE/ASX/AIM
share code: CZA
("CoAL" or the "Company")
ACQUISITION OF THE UITKOMST COLLIERY
1. Introduction
Shareholders are advised that on 4 April 2017 CoAL entered into
a sale of shares and claims agreement ("the Agreement") with Pan
African Resources Plc ("Pan African") to acquire 100% of the shares
in and claims against Pan African Resources Coal Holdings
Proprietary Limited ("PAR Coal") for a purchase price of R275
million (US$ 20.5 million) (the "Purchase Price") ("the
Acquisition").
PAR Coal holds a 91% shareholding in Uitkomst Colliery
Proprietary Limited ("Uitkomst") with the remaining 9% held by
broad-based trusts (including employees and communities) and a
strategic entrepreneur's trust.
2. CoAL's Rationale for the Acquisition
CoAL has continued to restructure its balance sheet to align its
project pipeline and ensure that it is well positioned to unlock
shareholder value through its flagship Makhado development project.
As part of this restructuring, the Company recognised that limited
cash flow will be generated during the Makhado pre-production phase
over the next three to four years and therefore the Company has
been focussed on acquiring a cash generating asset. The Uitkomst
Acquisition represents a highly compelling and attractive value
proposition that CoAL believes to be value accretive and which will
provide cash flows to support CoAL as the Company continues to
progress its flagship Makhado project.
CoAL believes that Uitkomst will complement CoAL's flagship
Makhado project and development project pipeline:
-- Creating a sustainable, multi-product mining group with a
skilled team with excellent resources adding to the development
profile;
-- Providing positive cash flows from Uitkomst;
-- Enlarging the asset base which provides a stronger
proposition to access the necessary funding required to pursue the
development of the enlarged group's growth opportunities; and,
-- Positioning CoAL as a potential consolidator with a management team capable of delivery.
3. Background Uitkomst
Uitkomst is a high grade thermal export quality coal deposit
with metallurgical applications, which is situated in the Utrecht
coalfields in KwaZulu Natal. Uitkomst consist of an existing
underground coal mine (Uitkomst - South Mine) and a planned life of
mine extension into the northern area (Klipspruit - North Mine).
The South Mine is an easily accessible and well-established
operating mine. Existing infrastructure such as power supply, water
supply, buildings, workshops, weighbridge, water storage and
management facilities are all in place. Uitkomst currently employs
approximately 520 employees (including contractors).
For the 6 months ending 31 December 2016 the operation processed
236 011 tonnes and sold, including acquired coal, 327 202 tonnes of
metallurgical quality coal which generated a revenue of R225
million with an EBITDA[i] of R38 million. Uitkomst had a net asset
value of R209 million and
made operating profits of R21.3 million for the 6 months ended
31 December 2016 as disclosed in the interim financial statements
of Pan African.
4. Terms of the Acquisition
Under the terms of the Agreement the Purchase Price is to be
settled on the effective date as follows:
-- R125 million (US$9.3 million) payable in cash ("Cash Consideration"); and
-- A R25 million (US$1.8 million) deferred consideration ("the
Deferred Consideration"). The Deferred Consideration can be repaid
by CoAL at any time prior to the 24 month anniversary of effective
date of the Acquisition. The Deferred Consideration will bear
interest at the prime rate, and shall be repaid on the second
anniversary of the effective date. CoAL shall be entitled to prepay
any amounts in respect of the Deferred Consideration. If not
settled after 24 months the balance outstanding can be settled
through the issue of new CoAL shares at the 30 day volume weighted
average price as traded on the JSE ("CoAL VWAP") on the date
immediately prior to the date on which Pan African gives its
election;
o To the extent that certain coal buy in opportunities are not
secured by or with the assistance of Pan African, within two years
from the effective date, which would result in CoAL suffering a
lower economic benefit, the Deferred Consideration can be reduced
by such value, subject to a maximum of R15 million; and
-- 261 287 625 newly issued CoAL shares (equivalent to R125
million) equating to approximately 9.3% of the total issued share
capital of CoAL ("Share Consideration"). The deemed issue price of
the Share Consideration is based on an 8% discount to the CoAL VWAP
as at 31 March 2017, being R0.52.
There will be no change to the CoAL Board of directors as a
result of the Acquisition.
5. Funding of the Acquisition
The Cash Consideration of the Acquisition will be funded through
internal cash resources and through the proceeds of an aggregate
US$13 million equity investment from Summer Trees Pte Ltd and
M&G Investment Management Limited at a subscription price of
R0.52 (US$0.03878) per CoAL Share, resulting in the issue of 335
250 000 shares ("Subscription Shares") pursuant to agreements with
CoAL.
6. Conditions Precedent
The implementation of the Acquisition is both subject to and
conditional on the fulfilment of conditions precedent customary for
a transaction of this nature and include, inter alia, the
following:
-- CoAL has obtained all of the requisite shareholder, AIM, JSE
and ASX approvals to implement the Acquisition and ancillary
transactions;
-- Uitkomst has entered into a supply of coal agreement on terms acceptable to CoAL;
-- Uitkomst has been released, in writing, from its obligations
as a guarantor in terms of Pan African facility agreements;
-- Pan African has been released from its obligations as
guarantor from the financial provisions provided to the DMR ("the
Guarantee") and the Guarantee has been replaced in a manner and
form acceptable to CoAL;
-- Pan African and CoAL have entered into a transitional services agreement;
-- The approval by the Competition Authorities in terms of the Competition Act; and,
-- Any exchange control approval which might be required from
the Exchange Control Authorities, in terms of the Exchange Control
Regulations is obtained.
7. Management and Employees of Uitkomst
Pan African will for a period of six months (which period can be
extended by mutual agreement between the Parties) post the
effective date of the Acquisition, assist CoAL with the transition
of the management and marketing of Uitkomst. CoAL places a high
value on its people and views Uitkomst as a well-managed business
and believes that retaining key personnel within Uitkomst will be
key for delivering the business' strategy.
8. Posting of Documentation
Details of the Acquisition will be included in the CoAL
circular, which will contain, inter alia, a notice of the CoAL
general meeting and a form of proxy ("Circular"). The Circular is
expected to be posted to CoAL shareholders in mid-April. The
salient dates and times pertaining to the Acquisition will be
published at the time of posting of the Circular. Although
shareholder approval is not specifically required for the approval
of the Acquisition, CoAL will require shareholders to approve the
issue of the Share Consideration and Subscription Shares.
9. Implementation of the Transaction
Subject to the Acquisition becoming unconditional, it is
expected to be implemented in June 2017.
10. Presentation and Webcast
CoAL will make a presentation by webcast regarding the
Acquisition at 10am (South Africa Time) on Wednesday, 5 April 2017.
The presentation and webcast details are available on the CoAL
website (www.coalofafrica.com).
Johannesburg
5 April 2017
Enquiries
Coal of Africa Limited
David Brown, De Wet Schutte and Celeste van Tonder (Telephone:
+27 (0)10 003 8000)
Qinisele Resources (Proprietary) Limited (Corporate Adviser to
CoAL)
Robert Philpot and Dennis Tucker (Telephone: +27 (0)11 883
6358)
Peel Hunt LLP (Nominated adviser and Broker to CoAL)
Matthew Armitt, Ross Allister and Chris Burrows (Telephone: +44
(0)20 7418 8900)
Investec Bank Limited (JSE Sponsor for CoAL)
Robert Smith and Tanya Cesare (Telephone: +27 (0)11 286
7000)
This announcement contains information which constitutes inside
information within the meaning of Article 7 of the Market Abuse
Regulation (Regulation (EU) No. 596/2014)
Forward-Looking Statements
This Announcement, including information included or
incorporated by reference in this Announcement, may contain
"forward-looking statements" concerning CoAL and/or Pan African
that are subject to risks and uncertainties. Generally, the words
"will", "may", "should", "continue", "believes", "expects",
"intends", "anticipates" or similar expressions identify
forward-looking statements. These forward-looking statements
involve risks and uncertainties that could cause actual results to
differ materially from those expressed in the forward-looking
statements. Many of these risks and uncertainties relate to factors
that are beyond CoAL ability to control or estimate precisely, such
as future market conditions, changes in regulatory environment and
the behaviour of other market participants. CoAL cannot give any
assurance that such forward-looking statements will prove to have
been correct. The reader is cautioned not to place undue reliance
on these forward looking statements. CoAL and Pan African assume no
obligation and do not undertake any obligation to update or
revise
publicly any of the forward-looking statements set out herein,
whether as a result of new information, future events or otherwise,
except to the extent legally required.
Statements of intention
Statements of intention are statements of current intentions
only, which may change as new information becomes available or
circumstances change.
Exchange rates
The following exchange rates have been applied in this
announcement: US$ / ZAR of 13.41.
[i] Earnings before interest, taxation, depreciation and
amortisation, impairments and profit/loss on disposal of
investments.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCLIFLDSSIEIID
(END) Dow Jones Newswires
April 05, 2017 03:18 ET (07:18 GMT)
Coal of Africa (LSE:CZA)
Historical Stock Chart
From Apr 2024 to May 2024
Coal of Africa (LSE:CZA)
Historical Stock Chart
From May 2023 to May 2024