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Tegeta eyeing other assets following Optimum takeover

NAZEEM HOWA
Once the Optimum Coal Mine transaction is completed Tegeta will supply a maximum of 5% of Eskom’s total coal supply

NAZEEM HOWA Once the Optimum Coal Mine transaction is completed Tegeta will supply a maximum of 5% of Eskom’s total coal supply

4th March 2016

By: Ilan Solomons

Creamer Media Staff Writer

  

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Junior coal mining company Tegeta Resources & Exploration is on the lookout for new opportunities to grow the business, Oakbay Investments CE Nazeem Howa tells Mining Weekly.

Tegeta is 64%-owned by local investment company Mabengela Investments and Oakbay.

This follows the Competition Tribunal’s approval last month of the takeover of Optimum Coal Mine (OCM) and six other target firms by Tegeta on condition that there would be no merger-specific retrenchments.

OCM is controlled by Optimum Coal Holdings (OCH) and both OCM and OCH are in business rescue.

Once the transaction has been completed, Tegeta will supply a maximum of 5% of State-owned Eskom’s total coal supply.

With regard to the company’s turnaround strategy for OCM, Howa says “it is not appropriate” for [the company] to comment on business strategy until the acquisition of the mine has been formally completed and all approvals from the appropriate authorities received.

“We will make a further announcement on our vision for the business at a later date,” he states.

Howa points out that Oakbay has a long record of strong business performance and turnaround skills and has consistently created more jobs for South Africans.

“For example, we have created 3 500 jobs in mining. This is at a time when many in the mining sector are making large numbers of their employees redundant. Since 2015, more than 10 000 jobs have been cut by South Africa’s top three mining companies.

“This acquisition has also prevented a liquidation that would have caused 3 000 people to lose their jobs,” he points out.

The company also owns the Brakfontein colliery, which is 20 km from Delmas, in Mpumalanga.

The mine is an openpit operation, mining No 4 upper, No 4 lower and No 2 seam coal. Brakfontein has a single pit, which is about 450 m wide and 300 m long.

During a visit to the site in April 2015, Tegeta CEO Jacques Roux informed Mining Weekly that the Brakfontein operation had an estimated five- to seven-year life span remaining, while the mine’s extension project, with a proven resource of 15-million tons, was estimated to have a life-of-mine of 12 to 14 years.

Brakfontein and its extension project have contracts to supply Eskom with 100 000 t/m of coal each.
Roux highlighted that Brakfontein had been supplying coal to Eskom since March 2015 and, as at July 19, 2015, had not had a single complete coal stockpile rejected by the power utility.

He attributed this to the company’s high degree of quality monitoring on all the coal it produces. Mining and processing services provider Shiva Uranium is the mining contractor responsible for undertaking the mining operations at Brakfontein, while Tegeta itself undertakes the crushing, and is also responsible for the management of the coal transport logistics.

However, Eskom is responsible for the actual transportation of the coal, using its own fleet of contractors to deliver coal to the Majuba power station, which is about 200 km away from the mine. Roux points out that about 50% of the mine’s coal is railed to Majuba by Eskom using the power utility’s Hawerklip coal rail siding, which is about 2 km from the mine, and the other 50% is trucked directly to the power station.

Brakfontein has assets valued at R100-million, consisting of a large fleet of Caterpillar mine trucks, including two excavators, eight 40 t articulated dump trucks, four front-end loaders, one bulldozer and one grader, as well as a R10-million crushing and screening plant. The plant has the capacity to produce 500 t of material an hour.

Further, Roux highlighted that Brakfontein had a workforce of about 100 people, including mining contractors, 95% of whom had been sourced from the local Brakfontein community.

Tegeta’s project portfolio also includes the Vierfontein colliery, which is near the town of Ogies, and the De Roodepoort project, located in Ermelo, both in Mpumalanga. Tegeta further holds prospecting licences for the Syferfontein project and the Welgezegend project, in Standerton, Mpumalanga.

The Vierfontein colliery is currently under care and maintenance; however, Tegeta plans to bring the mine back into operation in the near future. Tegeta also has prospecting rights for the De Roodepoort project and prospecting is at an advanced stage. The mining right will be applied for once prospecting is completed.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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