Standard Bank gives Waterberg Coal time to refinance

9th April 2015

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – Standard Bank on Thursday kept the Waterberg Coal Company’s expired loan facility rolling on a daily “on demand” basis to allow the ASX- and JSE-listed company to make alternative funding arrangements.

Simultaneously, Waterberg Coal, headed by Western Australia-born CEO Stephen Miller, 55, also asked the ASX to extend the suspension of the trading in its shares until May 10.

The company, which is developing a coal project in South Africa’s Limpopo province close to JSE-listed Exxaro’s Grootegeluk coal mine, said in a stock exchange news service announcement that it had been in discussion with funding agencies for both its proposed coal export project and also to retire Standard Bank debt, which it had been unable to do on the April 9 deadline day.

Waterberg Coal, which is said to have identified a resource of more than three-billion tonnes of coal in the Waterberg, told Creamer Media’s Mining Weekly Online last month that the company expected its first shipments of export coal to take place in the third quarter of 2016, building up to four-million tonnes a year by 2020.

It added that the profitability of this export project would be helped by the supply of lower-grade coal to a 600 MW independent power producer, following its involvement in the Department of Energy’s bid invitation process.

Earlier this year a successful bulk sample burn test at Majuba power station raised hopes that the way had been opened for the company's coal to be used at Majuba power station in Mpumalanga.

Technical work the company had been doing with Eskom was expected to result in the concluding of a price agreement with the State utility to supply 10-million tons of coal a year to Majuba for 30 years, on a take-or-pay basis.

While most South African coal projects are predicated on delivering low-quality coal to Eskom and high-quality coal to the export market, the intention of Waterberg Coal's project was to supply export quality coal to Eskom, for which it was negotiating a price matching the additional heat provided.

It intended delivering coal with a calorific value (CV) of 23 and its agreement with Eskom was expected to trigger the investment of R10-billion in an opencast coal-mine that would have been second in size only to Grootegeluk mine, which supplies Eskom’s Matimba power station and which is contracted to supply the still-to-be-commissioned Medupi power station.

The plan now is for that coal to bypass the domestic market and be put into the export market by Waterberg Coal, a company which is a reconfiguration of dual-listed Firestone Energy and which has Sekoko Resources, led by Tim Tebeila, as its black economic-empowerment (BEE) partner, with former Mpumalanga premier Mathews Phosa as its chairperson.

Chartered accountant Miller cut his teeth in mining under gold developer Robert de Crespigny, who grew Normandy Mining from a $1-million shell to a $3-billion company in 16 years, and was also involved in the acquisition from BHP and Shell Minerals in 1992 of the Lennard Shelf lead/zinc operations in the Pilbara district of Western Australia, which grew from a $1-million shell company to a $400-million market capitalisation in 12 months.

Edited by Creamer Media Reporter

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