ICHOR Coal N.V.: IchorCoal concludes agreements to acquire Continental Coal's Penumbra and Vlakvarkfontein Coal Mines
Montag, 08.06.2015 16:06 von DGAP
DGAP-News: ICHOR Coal N.V. / Key word(s): Acquisition/Miscellaneous
ICHOR Coal N.V.: IchorCoal concludes agreements to acquire Continental
Coal's Penumbra and Vlakvarkfontein Coal Mines
08.06.2015 / 16:00
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IchorCoal concludes agreements to acquire Continental Coal's Penumbra and
Vlakvarkfontein Coal Mines
- IchorCoal to acquire Penumbra and Vlakvarkfontein for R128 million
- The acquisitions are an important part of IchorCoal's plan to
participate meaningfully in the South African coal sector
- Synergies to be extracted from combining IchorCoal's Vunene mine and
Continental Coal South Africa's Penumbra asset
Johannesburg, 8 June 2015. Ichor Coal N.V. ("IchorCoal") has today
announced that it has entered into binding agreements to acquire
Continental Coal Limited South Africa's ("Continental Coal South Africa")
interests in the Penumbra and Vlakvarkfontein coal mines (the
"transaction").
IchorCoal will pay ZAR55 million for Continental Coal South Africa's 100%
interest in Penumbra, which has a resource of 14 million gross tonnes in
situ and produced 500,000 tonnes of coal per annum since 2012. The Penumbra
acquisition also includes a rail siding and an annual export allocation of
18,000 tonnes at Richards Bay Coal Terminal. In addition, an amount of
ZAR73 million will be paid for Continental Coal South Africa's 50%
shareholding (and 60% economic interest) in Ntshovelo that wholly owns
Vlakvarkfontein, an opencast operation that produces approximately 1.2
million tonnes of thermal coal a year.
IchorCoal intends funding the acquisitions of Penumbra and Ntshovelo
through a combination of internal funds and third party funding.
"The transaction," said Nonkululeko Nyembezi-Heita, CEO of IchorCoal, "is
another step toward
IchorCoal becoming a leading mid-tier thermal coal producer in South
Africa. Particularly noteworthy is the proximity of Penumbra to our current
operation at Vunene and the potential to extract material synergies, which
will result in numerous benefits including the lowering of the overall
operating cost. Further, our existing, indirect, shareholding in
Vlakvarkfontein makes us the logical acquirer of this asset and clearly
demonstrates IchorCoal's strategy to actively participate in the
consolidation of the South African junior coal sector."
Continental Coal South Africa and its wholly owned subsidiary companies
− Mashala Resources and Penumbra Coal Mining − entered into business
rescue proceedings in terms of Chapter 6 of the Companies Act, 71 of 2008
in November 2014. The court appointed business rescue practitioners
initiated a sale process on the Penumbra asset in February 2015, with
IchorCoal being selected as preferred bidder for Penumbra following
approval of the business rescue plan at a meeting of creditors on 14 April
2015. IchorCoal was also selected as preferred bidder for Continental
Coal's interest in Vlakvarkfontein as part of this process. Ntshovelo was
not placed under business rescue and continues to operate profitably.
Transaction Rationale
IchorCoal believes the transaction has material and immediate benefits to
its current operations and asset base for the following reasons:
- The transaction has provided IchorCoal with an opportunity to acquire
production assets at an attractive price;
- The acquisition of the assets increases IchorCoal's current
attributable mineable resource base of 449 million tonnes to 460
million tonnes;
- IchorCoal anticipates securing immediate access to an additional
~1.2mtpa in attributable run of mine production, an increase in excess
of 50% on 2014 production of 2.1m tonnes;
- The transaction provides IchorCoal with the ability to extract
operational efficiencies as a result of the geographic proximity of
the combined assets and larger operational platform; and
- The addition of the assets to IchorCoal's portfolio further mitigates
its operational risk through asset diversification and introduces
greater operational flexibility.
Ms Nyembezi-Heita added, "This is a significant opportunity for IchorCoal
to increase its footprint in the domestic and export coal markets. We
remain focused on our plan to increase attributable coal production, which
we expect will coincide with an anticipated increase in the price of and
demand for coal".
Conditions Precedent
The transaction remains subject to the fulfilment of a number of conditions
precedent that are typical for a transaction of this nature, including
requisite regulatory approvals from competition authorities and the
department of mineral resources. The Ntshovelo transaction also remains
subject to the existing shareholder not exercising its pre-emptive rights.
Overview of Continental Coal South Africa
Continental Coal South Africa is 74% owned by ASX listed Continental Coal
Limited and 26% by SIOCCDT Resources Holdings (Proprietary) Limited.
Continental Coal South Africa primarily operates as an investment holding
company with interests in subsidiaries with business activities related to
the exploration, development and operation of thermal coal mines and
properties in South Africa. Its flagship mine - the Penumbra coal mine held
through Mashala Resources Proprietary Limited ("Mashala Resources") - is
located 5 kilometres south of Ermelo, Mpumalanga and operates as a
conventional board and pillar coal mine. Penumbra has a resources base of
14 million gross tonnes in situ and has been producing approximately
500,000 tonnes per annum for export since November 2012. Following
difficult trading conditions, Penumbra was placed on care and maintenance
in February 2015.
Continental Coal South Africa's primary producing asset is the
Vlakvarkfontein coal mine located near Ermelo, which is wholly owned by
Ntshovelo Mining Resources (Proprietary) Limited ("Ntshovelo"). The latter
in turn is a 50:50 joint venture between Continental Coal South Africa and
Orha Mining Proprietary Limited, with a 60% economic interest accruing to
Continental Coal South Africa. Vlakvarkfontein is an opencast operation
with a resource base of nearly 6 million tonnes and produces approximately
1.2 million tonnes per annum and has been in production since May 2010.
Advisers
Macquarie First South Capital Proprietary Limited is acting as financial
adviser to IchorCoal in relation to the transaction. Werksmans Incorporated
is providing South African legal advice to IchorCoal in relation to the
transaction.
About Ichor Coal N.V.
Ichor Coal N.V. is an international mining company focusing on thermal coal
production in South Africa. The company owns and operates its own coal
resources and sells the output coal both locally and in international
markets. Furthermore, the company holds minority equity positions in two
South African mining companies. IchorCoal is led by its CEO, Nonkululeko
Nyembezi-Heita and COO, Andries Engelbrecht - who together bring
substantial experience in the industrial and commodity sectors.
Contact:
Ichor Coal N.V.
30 Jellicoe Avenue
Rosebank 2196 South Africa
Tel: +27 11 2681100
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