Seasoned AIM watchers, weary of watching Chinese companies like West China Cement Ltd (LON:WCC) move to new pastures, may be interested, even excited, to hear about the latest plans of ASX listed Continental Coal Limited (ASX:CCC) to list on the London market.
The shares of Continental Coal, an emerging coal mining and exploration company focused on South Africa, recently saw frenzied trading activity on the ASX after announcing the acquisition of Mashala Resources for US$35m up-front (plus some deferred consideration). Owner of the Ferreira mine, Mashala is another South African coal mining business set up in 2003 which Continental’s recently appointed CEO Lodewyk 'Don' Turvey had identified as a possible target while he was at BHP Billiton.
At a London investor presentation on Wednesday, Director Jason Brewer gave an overview of “ContiCoal”, as it’s known down under. BEE compliant, the company holds a 74% stake in its underlying South African thermal coal producing business. After completion of the Mashala deal, it will have c. 500 million tonnes of resources and has a very ambitious production target of 16 million by 2015. The assets are located in South Africa’s Central Basin coalfields and will include two producing mines producing c. 2 million tonnes per annum, Vlarkvarkfontein and Ferreira, and a further eight development coal projects.
Project Map
Vlarkvarkfontein (60% stake) is ContiCoal’s existing production asset. It is an 850 hectare property, 100 km east of Johannesburg and some 13 km from Eskom’s Kendal power station. It is a 17 million tonne resource sufficient for a ten year mine life, with expected production of 100,000 tonnes of domestic quality thermal coal. The mine commenced coal sales in May this year, with the first commercial sales contracts signed in June.
Ferreira (100% stake) is to be acquired as part of the Mashala deal. It is a conventional opencast mine, with 3 million tonnes of resources. Mining commenced in August 2008 and the coal is export grade, with approximately 600,000 tonnes exported in 2009. According to management, the mine has a relatively short life (2 to 3 years) but with the opportunity to extend that further. In any case, the plan is to leverage the related infrastructure, including a wash plant, rail siding capable of exporting 1.2m tonnes and key logistics, for other nearby development projects.
Post the…
