A unit of Beijing Haohua Energy Resource Co Ltd has offered to inject US$100mn into Coal of Africa (CoAL)
The potential investment would follow a year of pre-tax losses suffered by CoAL, which tripled due to growing labour and capital costs, according to a CoAL statement on 1 October 2012.
In a Reuters report, CoAL said the equity funding offer from Haohua Energy International (HEI) came after diversified miner Exxaro chose not to exercise its option to acquire a 30 per cent stake in CoAL’s Makhado coking coal project.
The proposed deal would be executed in two stages, allowing HEI to subscribe for up to US$100mn of ordinary shares in CoAL. After the deal, HEI would own 23.6 per cent of CoAL, said the report.
CoAL chief executive John Wallington said, “The placement would expedite the development of CoAL’s projects and lead to the formation of a strategic partnership and provide direct exposure to the world’s largest coking coal market.”
CoAL has two operating collieries in South Africa, which produce thermal and coking coal for both domestic and export markets.
The mining company, which is also listed in London and Sydney, said adjusted operating pre-tax losses for the year to the end of June widened to US$32.8mn from US$10.1mn the previous year.
The jump was, it said, due to higher labour costs following increases in mining activity at its Mooiplaats colliery, once-off capital raising project costs and the exclusion of an asset sold during the financial year, CoAL added.
Revenue was down to US$243.8mn from US$261.4mn, with coal sales hit by a 27 per cent drop in export coal spot prices, said the company.
