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ContiCoal confirms November JSE debut
David McKay | Fri, 04 Oct 2013 09:38




[miningmx.com] – CONTINENTAL Coal, a 2.2 million tonne/year (mtpa) thermal coal producer operating in South Africa's Mpumalanga province, said it hoped to debut on the country's stock exchange in "early November", and added it would look to raise funds with local investors "at the appropriate time".
Don Turvey, CEO of ContiCoal, said the listing was partly to accommodate the 19.9% stake taken in the company by Village Main Reef (VMR) so that the investment house could hold its shares in South Africa.
However, Turvey said ContiCoal would be interested in boosting liquidity in the stock. The company is currently valued at A$21.2m on the Sydney Stock Exchange where it has a primary listing, about $200m.
First, however, the company is required to restructure some US$15m in convertible debentures before any other capital exercise, said Turvey.
This could involve getting shareholders to agree to an extension in the maturity date of the bonds which are due to expire in February, 2014. The company expects to finalise this by the end of this month, Turvey said.
As with many junior mining companies, the last 12 to 18 months have been a question of taking stock, re-financing the balance sheet as commodity prices decline and access to finance becomes tighter.
In the case of ContiCoal, it is selling off non-core assets, stripping out corporate costs where possible - including a reduction in director fees - and refinancing exists debt. Total borrowings were at $82m at the company's year end on June 30.
ContiCoal has cash flow which it generates through two mines - Vlakvarkfontein and Ferreira, with a third - Penumbra - in the process of building up. Ferreira is due to be exhausted later this year but production will be more than made up from Penumbra.
As a result, production for this year is likely to come in about 2mt or slightly more again this year, but the company-maker is De Wittekrans, a proposed 1.6mpta mine with a significant export portion but requiring some $120m in capital.
ContiCoal has recently rescoped De Wittekrans reducing the capital requirement from some $200m in rounded-up numbers.
Turvey believes getting De Wittekrans right will see the company's share rerate. He estimated that ContiCoal was already trading at a 30% discount to its net asset value, but with a properly pumping De Wittekrans, the company's NPV would rise to R3.5bn from the current R650m.