Makhado projects to start construction in 2016

Construction at Coal of Africa’s (CoAL) Makhado metallurgical coal project will begin in 2H16, according to the company’s 4Q15 quarterly report. Construction is expected to last 26 months with a further four-month ramp up phase. Final production capacity of the mine will be 5.5 million tpy of saleable product.

In 4Q15, the company appointed DRA to undertake the optimisation study and FEED package, following DRA’s work on the Definitive Prefeasibility Study, completed in 2013. The work will include the infrastructure components of the project, as well as the integration of the work of a number of specialist consultants.

The Makhado project also received its Integrated Water Use License (IWUL) from the South African Department of Water and Sanitation during the quarter. “The award of the IWUL for Makhado further signifies the government’s commitment to the flagship project and its potential for socio-economic transformation,” the company said.

On the finance side, the company signed an MoU with Qingdaao Hengshun Zhongsheng Group (Hengshun) regarding a proposed equity investment in Baobab Mining and Exploration, a CoAL subsidiary that owns the mining right for the Makhado project. Hengshun has now begun due diligence on the Makhado project and has expressed an interest in acquiring an interest in the project and in providing facilitated debt.

“The MoU with Hengshun is an important milestone in the identification of a strategic investor for the development of the company’s flagship Makhado project,” said David Brown, CoAL’s CEO. “In addition the potential acquisition of Universal will transform the company into a mid-tier producer.”

In November 2015, CoAL agreed to acquire Universal Coal for AUS$91 million. Australian-listed Universal currently produces about 2.4 million tpy from its South African assets with a near-term production development pipeline that could boost output by a further 2 million tpy in 2016.

CoAL has received signed statements of intent to accept its offer for Univeral from shareholders representing 40.1% of its total issued share capital, including Coal Development Holdings, Universal’s second largest shareholder. A minimum of 50.1% acceptance of the offer is required for the acquisition to be committed.

Edited by Jonathan Rowland.

Read the article online at: https://www.worldcoal.com/exploration-and-development/29012016/makhado-projects-to-start-construction-in-2016-140/