Universal Coal Plc is poised for expansion at the Kangala opencast coal mine following the acquisition of a significant stake in the Eloff Mining Company (Pty) Ltd (EMC), the 100% owner of the adjacent Eloff project (Eloff) for approximately AUS$4.35 million (ZAR 43.5 million).
The acquisition of an initial 29% stake in EMC, a company incorporated in South Africa, has been completed by Universal Coal Development IV (Pty) Ltd (UCDIV), which is owned by Universal (49%) and Ndalamo Resources (Pty) Ltd (51%). UCDIV is the 100% beneficial owner of the New Clydesdale Colliery (NCC), which is concluding the ramp-up phase of its opencast mining operations.
EMC is the holding company for two prospecting rights, covering an area of 8,168Ha, that is currently subject to a Mining Right application. In addition to the mineral rights, EMC owns the surface rights to 6,146.7Ha of the project area. These surface rights cover most if not all the areas identified for the Kangala expansion.
The acquisition allows Universal the opportunity to consolidate the contiguous resource base of the Eloff project with Universal’s existing Kangala coal mine and provides optionality in extension of Kangala’s life of mine.
The 29% stake in Eloff was acquired from Canyon Springs Investments 80 (Pty) Ltd, the purchase price of which has been settled from existing cash reserves, thereby eliminating the need to draw on shareholder equity contributions to fund the acquisition.
Commenting on the investment in Eloff, Universal’s CEO Tony Weber said: "We are delighted to have acquired a stake in Eloff, an asset which has the potential to increase capacity and sustainability at our first operation, Kangala, which continues to exceed original guidance. Record sales were achieved in June 2017 and Kangala has delivered strong cashflows throughout the 2017 financial year through increased sales of 2.4 million tpa. With NCC starting to achieve nameplate sales tonnages, we look forward to similar improvements in efficiencies being achieved over the next year, providing the company with its second, long-term, significant coal producing asset within the span of two years.”
Read the article online at: https://www.worldcoal.com/coal/12072017/universal-coal-ready-to-expand-kangala-coal-mine/