Optimum Coal buys prospecting rights from BHP

Fri Aug 19, 2011

* Says buys two prospecting rights for 235 mln rand
* Says assets suitable for coal exports, Eskom supplies

JOHANNESBURG Aug 19 (Reuters) - South Africa's sixth-largest coal producer Optimum Coal said on Friday it had bought two prospecting rights from BHP Billiton Energy Coal South Africa (BECSA) in a move to boost its porfolio.

Optimum said it would buy from BECSA the Remhoogte prospecting rights, which have an inferred resource of around 306.5 million tonnes.

The 235 million rand ($32.6 million) acquisition will be funded through the company's own cash resources and re-financed group debt facilities, it said.

Chief Executive Mike Teke said the acquisition gives Optimum an attractive growth opportunity.

"At this stage it is envisaged that Remhoogte will principally be a replacement for Optimum Colliery's export saleable production in the medium to long term, although market conditions and an improvement in export logistics could result in the development of the project being expedited," Teke said in a statement.

The company said a planned Remhoogte mine is expected to produce 2.5 million tonnes of export coal per year and an estimated 400,000 tonnes of middlings product well suitable to supply power utility Eskom's nearby Camden and Majuba power stations.

The site is located near the coal rail line leading to the Richards Bay Coal Terminal, it added. ($1 = 7.207 South African Rand) (sourced Reuters)