Coal of Africa Share Discussion Threads

[boodgewoodge] 15/7/2016 13:10

could we possible be in for an extension on the SENS/RNS as well !!!

[boodgewoodge] 15/7/2016 10:41

seems like the most tight lipped SENS/RNS , not even a hint from the SP

[2bozmo] 15/7/2016 09:03

Can be anytime today.....

[boodgewoodge] 15/7/2016 08:40

any reason for the delay in the release of the SENS/RNS ?

[boodgewoodge] 14/7/2016 14:14

when we bid for EXXARRO I just hope we have all our ducks in a row then !!!!

[ianio5691] 14/7/2016 13:49

SOUTH African coal mining executives said proposals by Eskom aimed at ensuring the quality of coal it consumes would make it more difficult to practically supply the fuel to the utility’s power stations.

Eskom last week unveiled a series of new rules for suppliers of coal that included paying an upfront fee intended to motivate coal miners to guarantee the quality of their coal.

Coal quality testing would also be moved to the power station which would replace the current system in which coal miners are granted pre-certification at the mine. Whilst new suppliers would also be asked to fall in with the new rules, existing suppliers would have to re-negotiate their contracts.

Eskom said last week that it had “… experienced numerous coal quality challenges with various suppliers, including long-term tied colleries.

“To mitigate this exposure, Eskom has, over time, improved on coal quality monitoring, assurance and lately risk transfer. A number of changes are being considered and will be implemented for all new contacts and renegotiated for all contracts,” it said.

It also said it would withhold “… payment or coal price adjustment in the even that coal quality at the delivery point is inferior to contractual qualities”.

But perhaps the most important innovation was the “… upfront payment of a quality deposit by suppliers to Eskom”. Including black economic empowerment demands that now require new suppliers to be 50% empowered, executives said the proposals threw up another barrier to business.

“These are some of the new issues being put on the table by Eskom,” said Waheed Sulaiman, CEO of Wescoal Holdings which is negotiating a coal sales agreement (CSA) currently for supply of coal from its newly developed Elandspruit mine in Mpumalanga province. “They [Eskom] are making it harder to conclude a long term contract,” he said.

“The idea of a deposit paid by a supplier does appear to be out of kilter with market norms,” said David Brown, CEO of Coal of Africa (CoAL). CoAL is in the process of buying Australian firm, Universal Coal, which supplies up to two million tonnes of coal annually to Eskom from its Kangala colliery.

“The process does appear to have some logistical challenges,” Brown added. “The pre-certification process at point of supply versus as the power plant does make more sense,” he said, adding that certifying the coal quality at the plant would end up with “… trucks of coal going back and forth a bit”.

Bevan Jones, one of the founders of GlobalCOAL, and now running an investment portfolio at Thebe Investment Group, said it didn’t make sense for suppliers to put down a quality deposit.

Eskom consumes about 120 million tonnes a year of coal and lists the fuel as among its most important cost components when calculating its application for tariff increases. As part of a rejig of how the tariff is calculated, the National Energy Regulator of South Africa has asked Eskom to account for its coal cost and qualities on a station-by-station basis.

Mandi Glad, CEO of Keaton Energy, said the proposals were impractical. “Were these proposed changes to be implemented it would certainly make management of the CSA more challenging rather than negotiation of the CSA more problematic.

“Practically I cannot believe that Eskom could get these changes to fly for existing CSAs. I struggle even to imagine that they could work for new contracts,” she said.

It was coal quality, as well as cost, that stood at the heart of two disputes Eskom had with Glencore and Exxaro Resources over the supply of coal from the Optimum and Arnot colleries respectively.

[ianio5691] 14/7/2016 13:47

Think Eskom are playing fast and loose with all suppliers.

An article in Mining weekly highlighted the issue, reporting They are trying to move the goal post whereby supplies are quality checked and potentially refused on delivery instead of at source prior to dispatch.
The potential costs of this could be quite high.

They are right to refuse to sign the deal if it is not commercial.

At this rate Eskom risk a supply issue, which would serve them right.

[2bozmo] 14/7/2016 13:44

I think that's the game, give them deadline and get it done. Eskom beyond our control unfortunately and arguing with Guptas etc

[boodgewoodge] 14/7/2016 13:39

for how long and why has Eskom been delaying to commit to the dotted line with NCC and why then was this deal not modified or adjusted accordingly and timeously and are we just hoping for that signature now because there is a deadline !

[2bozmo] 14/7/2016 12:53

We made the bid in November and NCC was due to sign deal at beginning of year. That never materialised hence the need to find extra working capital.

[boodgewoodge] 14/7/2016 12:05

can the deal really be re - structured at this stage whereby NCC is excluded ? how is possible that the lack of a contract with Eskom not be known and addressed even before a price was determined and the offer made for UC ( real value of UC or potential value ) .... long , long ago ? The funding ..... or the lack of it for the readmission , was this not known before and should have been well provided for , again long , long ago ?

[ianio5691] 14/7/2016 11:16

I can't see much happening tomorrow other than confirmation that deal is off.

If it were on, there would be a lot more activity with the shares - markets have a sneaky way of pre-empting these sort of deals.

Long term, it's still a hold as we are in a lot better shape going forward.

Just need the right deal to get some cash flow.

[2bozmo] 14/7/2016 10:34

So speaking with company this morning, they have been "evaluating target company's assets" i.e Kangala. Obviously if Universal signs deal with Eskom by 15th then we'll take that whole company. There's no point in taking NCC with no off take agreement as we're after a cash generating asset, and there's little incentive to find this working capital if means additional debt or dilution with no immediate upside. We have until August 3rd to issue shares for this purpose otherwise we will need to have another company AGM or EGM and resolution. I remain cautiously optimistic that setting 15th as a strong incentive with deadline meaning either Eskom/UC deal is done or a deal involving Kangala assets.

[boodgewoodge] 13/7/2016 13:19

that's the reason why I'm not committing to " I will eat my coal if that happens " !!!! an outside chance , but yes , still a chance

[2bozmo] 13/7/2016 12:53

Believe it when it happens. Given we've been in discussions with Universal the last 7 months, they must want something to come of it (otherwise Ichor will scoop them up and they are opposed to that by all accounts!). Maybe we take Kangala and not NCC

[boodgewoodge] 13/7/2016 12:20

the volume is too low to extrapolate any information , a SIGNED CSA between Eskom and Universal AND the required funding to be order within the next +/- 48 hours ....... I will switch from gas to coal in my kitchen at home ( safer than saying i will eat my piece of coal !!!) just in case

[ianio5691] 13/7/2016 12:12

Buying certainly picking up....

Are we still in the game?

[2bozmo] 13/7/2016 12:06

Hearing some mumble that some form of deal has been done?! Rumour but might explain the buying this morning

[boodgewoodge] 09/7/2016 08:53

definitely having these great assets in our stable is of sound value , coal prices edging upwards is also in our favour , but the bottom line is we need to produce and sell our product , UC will place us in an income generating zone and that alone will create a whole spectrum of growth opportunities , until we are income generating we are only potential and the share price might very well be justified if not flattering at these levels , so even if management has to stand on the table in order to hammer something out they should

[2bozmo] 08/7/2016 17:29

If we wanted to pursue Universal then we could easily have extended deadline further. Possible outcomes:1) NCC cuts a short term deal with Eskom that will meet our 12-month requirements and meet AIM requirements. Eskom paying over the odds so deal could be made.2) we have a number of parties interested in Makhado, one of those (or someone else, eg. Ichor) provides working capital to meet AIM requirements;3) we forget Universal deal. The market didn't react when we announced the deal in November, a few London specs sold out today hence lower but more interested in buying dip on JSE which closed only 4 ZAr lower at equivalent of 3.90p;Remember this is a reverse takeover and we still have great assets in Makhado, Vele, Mooiplaats and GSP, which by themselves should be valued at more than the current share-price. Could argue the Universal deal has been holding back the current CZA share price given performance of thermal coal and dilution.I've met David Brown a number of times and trust him and management team. He's still confident today this deal gets done, and setting a deadline of 15th means management sit around the table and hammer something out. Yes we could have extended deadline and CoAL must have a reason. Yes, we would have had to have had another EGM to allow issuance of shares past 3 August deadline but is that such a hardship to get assets? Overall this fixed deadline isn't necessary a bad thing. Given the consolidation expected in this space, will this ultimately make us a takeover target?It's definitely going to be interesting next week.

[casual47] 08/7/2016 13:46

"If there was no chance then they would have just said no dea"

I'd take that with a pinch of salt. They need to be seen to be doing all they can to make this happen or else they could get sued.

[2bozmo] 08/7/2016 12:57

Posted on iii.Having had some e-mail exchanges with the company this morning, it appears that this deal is still very much alive. "We are confident that we should close out our funding opportunities next week, but until it is a done deal one can never be a 100% certain as we not in control of all the aspects of our funding. It should be noted that the funding requirement has in the most part come about because of the lack of the Eskom contract which should have been completed in December last year and NCC should have already be in production. . Both teams will be working diligently to secure a positive outcome." I questioned why they didn't just extend it like they did previously. They would need to refresh the EGM approved resolutions which would take another month at least so wanted to keep all feet to the fire. He seemed positive the deal will get done, and drawing a direct line in the sand is potentially very positive to getting it done. If there was no chance then they would have just said no dea

[boodgewoodge] 08/7/2016 12:13

seems more like a lack of funding for the re admission of the Enlarged Group , rather than the NCC and Eskom contracts , bearing in mind that Kangala is the Eskom supplier for now . If funding is the problem then the board has seven days in which to finalize the funds from the third parties with whom they have been " continuing to progress with " as per 17/06/2016 SENS/RNS ..........and they've surely had sufficient time for the conclusion of this !

[ianio5691] 08/7/2016 10:49

2nd RNS released stating that some conditions have been waived.

It now seems that the stumbling block is.... CoAL notes that the CSA with Eskom at NCC has not yet been finalised or signed

Is this game over, or a last ditch warning to force the signing?

How likely is this to proceed?

[casual47] 08/7/2016 10:42

This will come good but will take time.

Just shows to be wary of "boom!" and "multibag" type posts. It rarely works that way, unfortunately.