Intense competition from local and international coal-mining companies to secure Pegasus project, the last big coal resource available in the area
Tuesday, November29, 2011
WESCOAL , which is fighting off liquidation applications in a long-running feud with a disgruntled contractor, unveiled a R102m deal yesterday to buy a 51% stake in a sought-after metallurgical coal deposit near Witbank.
The all-share transaction will give Wescoal a controlling stake in the undeveloped Pegasus deposit owned by BHP Billiton Energy Coal SA. Wescoal will issue 140-million shares at 73c each to HSTI, a shelf company set up to house the asset.
It will cost up to R250m more to bring an opencast mine into production there to supply South African users of metallurgical coal such as the ferrochrome industry as well as the export market, CEO Andre Boje said.
"This is very exciting and it will put us into a different league," Mr Boje said.
"You’ll notice we are still trading under a cautionary notice, so there are other deals we are doing," he said.
The deposit has a measured resource of 15-million tons and should be in production from 2014, with low costs due to a low stripping ratio of 1,46, which means there is relatively little waste to move for each ton of coal dug out of the mine, a big cost factor for coal miners.
"There was intense competition from local and international coal-mining companies to secure the Pegasus project, as the reserve is known industry-wide as the last great coal resource available in the Witbank and Middelburg coalfields," Mr Boje said.
An independent assessment had put the value of the deposit at between R593m and R946m, Mr Boje said.
Wescoal made the offer to buy the 51% last Friday from HSTI. It hopes to announce the owner of the remaining 49% in December or January and it is this partner that could be a source of finance to build the mine.
The full deal is expected to be concluded before June next year.
As part of the transaction, Wescoal will pay Bisischi Mining R54m in cash once the licence is transferred, of which the new partner will be liable for 49%. UK-listed Bisischi was one of the former owners of the Pegasus property in an empowerment transaction that went sour.
The transaction, along with a number of others Wescoal is working on, will go some way to offset the risk that has blown up around the Khanyisa colliery, where the owner of the mining right has filed for liquidation of Wescoal for nonpayment of royalties. Wescoal is opposing the application and has said the VAT number provided by owner did not exist.
(sourced BusinessDay)
Showing posts with label Wescoal Mining. Show all posts
Showing posts with label Wescoal Mining. Show all posts
Tuesday, November 29, 2011
Thursday, March 17, 2011
Wescoal and contractor trade blame
Sutha Civils lays fraud charge against Wescoal, threatens to launch liquidation process.
Mar15,2011 07:16:15 AM
By Allan Seccombe, Business Day
IN THE matter of Wescoal versus its contractor, Sutha Civils, both parties are at opposite poles, with Sutha laying a complaint with the police against the JSE-listed coal producer’s subsidiary, Wescoal Mining, which denies any wrongdoing and blames the action on "malicious intent".
Sutha will today file a liquidation process in the South Gauteng High Court, said Sutha CEO Nico Swart, who says he will meet members of the Commercial Crimes Unit to flesh out his allegations and give documentary proof. Mr Swart is clear about the root of his allegation made against Wescoal and its Khanyisa colliery. "There is no coal," he said yesterday .
He said Sutha was contracted to do open-cast mining at Khanyisa and were given co-ordinates by the mine’s geologist. However, when the site was opened, the targeted coal was not there, he said.
"This is not my problem if there is no coal," he said. "The tonnages mined from the box cuts are not what they told investors.
"I have my documents, contracts and drawings showing where places were opened up, but there was no coal. I can show these to investors, the police. I can show the coal is not there."
Wescoal Holdings CEO Andre Boje dismissed the claim with unusual bluntness. "I categorically deny that claim. Furthermore, I’m not going to debate with these hooligans in the media. They are making unfounded and scary allegations."
Wescoal and its lawyers had yet to see the documentary proof Mr Swart claimed to have, Mr Boje said. "Among a number of unsubstantiated claims, Sutha has now accused Wescoal of overstating tonnages mined at Khanyisa. We categorically deny this. We are a company with integrity and ethical principles and in this case, a target of malicious intent."
Wescoal’s counterallegation is that Sutha was mining outside the area in some cases.
Wescoal shares fell to 91c yesterday before staging a recovery to end back at Friday’s price of 99c.
Wescoal told the market via a release on Sens that it had begun its first investigation into irregularities in the Sutha contract within five months of Sutha being hired to mine the west pit at Khanyisa.
"No meaningful explanations were forthcoming from Sutha and the situation was exacerbated, until December 2010 when Wescoal removed Sutha from the Khanysia property and operation in entirety," the Sens statement said.
Mr Swart said there may be a second party to the liquidation proceedings. Mr Boje said he was aware of no other claims against Wescoal.
Khanyisa is the first operating mine in the group and marked its shift from being a coal trading firm to an integrated producer. It is an open-cast mine near Kendal in Mp umalanga and has an estimated reserve of 2,7-million tons.
In April to September last year , Khanyisa produced 887000 tons of coal, of which 546000 tons was supplied to Eskom. Wescoal said that the mine should reach its stated target of 1,2-million tons of run-of-mine coal by the financial year-end on March 31, and it is forecast to have supplied Eskom with 900000 tons in the same period.
By Allan Seccombe, Business Day
IN THE matter of Wescoal versus its contractor, Sutha Civils, both parties are at opposite poles, with Sutha laying a complaint with the police against the JSE-listed coal producer’s subsidiary, Wescoal Mining, which denies any wrongdoing and blames the action on "malicious intent".
Sutha will today file a liquidation process in the South Gauteng High Court, said Sutha CEO Nico Swart, who says he will meet members of the Commercial Crimes Unit to flesh out his allegations and give documentary proof. Mr Swart is clear about the root of his allegation made against Wescoal and its Khanyisa colliery. "There is no coal," he said yesterday .
He said Sutha was contracted to do open-cast mining at Khanyisa and were given co-ordinates by the mine’s geologist. However, when the site was opened, the targeted coal was not there, he said.
"This is not my problem if there is no coal," he said. "The tonnages mined from the box cuts are not what they told investors.
"I have my documents, contracts and drawings showing where places were opened up, but there was no coal. I can show these to investors, the police. I can show the coal is not there."
Wescoal Holdings CEO Andre Boje dismissed the claim with unusual bluntness. "I categorically deny that claim. Furthermore, I’m not going to debate with these hooligans in the media. They are making unfounded and scary allegations."
Wescoal and its lawyers had yet to see the documentary proof Mr Swart claimed to have, Mr Boje said. "Among a number of unsubstantiated claims, Sutha has now accused Wescoal of overstating tonnages mined at Khanyisa. We categorically deny this. We are a company with integrity and ethical principles and in this case, a target of malicious intent."
Wescoal’s counterallegation is that Sutha was mining outside the area in some cases.
Wescoal shares fell to 91c yesterday before staging a recovery to end back at Friday’s price of 99c.
Wescoal told the market via a release on Sens that it had begun its first investigation into irregularities in the Sutha contract within five months of Sutha being hired to mine the west pit at Khanyisa.
"No meaningful explanations were forthcoming from Sutha and the situation was exacerbated, until December 2010 when Wescoal removed Sutha from the Khanysia property and operation in entirety," the Sens statement said.
Mr Swart said there may be a second party to the liquidation proceedings. Mr Boje said he was aware of no other claims against Wescoal.
Khanyisa is the first operating mine in the group and marked its shift from being a coal trading firm to an integrated producer. It is an open-cast mine near Kendal in Mp umalanga and has an estimated reserve of 2,7-million tons.
In April to September last year , Khanyisa produced 887000 tons of coal, of which 546000 tons was supplied to Eskom. Wescoal said that the mine should reach its stated target of 1,2-million tons of run-of-mine coal by the financial year-end on March 31, and it is forecast to have supplied Eskom with 900000 tons in the same period.
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