JOHANNESBURG (miningweekly.com) – The deadline for the disposal of the Mooiplaats colliery by the triple-listed Coal of Africa Limited (CoAL) as well its capital-raising timeframe have been extended out.

Johannesburg, London and Sydney-listed CoAL said on Wednesday that it had agreed to give suitor Blackspear Capital more time to buy the idled Mooiplaats coal mine and TMM Holdings more time to buy all the shares it is selling to the venture capital company.

Blackspear now has until January 31 to meet the conditions precedent in the Mooiplaats agreement and TMM will be allowed to buy CoAL shares in three stages rather than two, giving it until late April to conclude the capital raise.

“Despite the delay, we’re confident that the transaction will complete on the terms originally reported,” CoAL CEO David Brown said of the Mooiplaats hold up.

Of the new fundraise timeframe, he added: “This allows us to conclude the equity raise, remove the conditions associated with TMM and look forward to progressing the Vele and Makhado projects.”

CoAL’s Vele and Makhado projects are potentially both company-making coking coal and thermal coal projects, while Mooiplaats, a thermal coal mine in Mpumalanga that was placed on care and maintenance in October last year, is seen as noncore and its sale forms part of the company’s five-point turnaround strategy implemented a year ago.

Loss-making CoAL, which ended the 12 months to June 30 with cash of only $2.1-million, set out in August and September to raise $65-million in equity capital and to sell Mooiplaats for $23-million, to give itself sufficient working capital for the next 18 months at least.

The exploration and project development company said in August and September that it would be selling 695-million shares at £0.055 a share in a two stages.

However, the second stage will now comprise 300-million ordinary shares at the same issue price of at £0.055 a share to raise £16.50-million on December 18 and have the shares admitted for trading on the ASX, Aim and the JSE on December 23.

The remaining shares, also at £0.055 a share, will now only be issued on April 29 in the new third stage.

Among the other buyers of the shares are Haohua Energy International of Hong Kong, M&G Investment Management and Investec Asset Management.

Investec Securities expects the Hoahua to end up with a shareholding of 26%, M&G with 20% and TMM with 12%.

In an interview with Mining Weekly Online earlier this year, Brown outlined plans to produce semi-soft coking coal and thermal coal from the brownfield Vele project in the short term and both hard coking coal and thermal coal from the Makhado and Greater Soutpansberg projects in the medium term and the long term.

Soutpansberg is said to host more than 90% of South Africa’s accessible hard coking coal resources and about 10% of total remaining domestic resources.

Envisaged is the eventual production of nearly seven-million tons of saleable coal a year, more than five-million tons of it being import-substituting price-premium hard coking coal used in steelmaking.

Brown foresaw the company playing a pivotal role in lowering the cost of inputs into local steel production, which is poised to be expanded through the signing of a memorandum of understanding by Hebei Iron and Steel Group of China and South Africa’s State-owned Industrial Development Corporation for the development of new steelmaking capacity in Limpopo province, where CoAL, which is itself backed by Chinese shareholders, has its projects.

The quality of the coals to be supplied has been approved by steelmaker ArcelorMittal South Africa, which had had a long-standing association with CoAL, and State electricity utility Eskom.

The 26-month construction of the $400-million Makhado plant is scheduled to begin in 2016 to allow production in 2018/19, with the proposed Hebei steel plant giving CoAL the potential benefit of having an anchor customer close to its mines.

The plan is for equity capital to fund the $23-million plant modification at the dual-product, 50-year Vele, which is expected to ramp up to 2.7-million tons of run-of-mine coal a year from the third quarter of next year.

An incoming strategic partner is expected to hold 20% to 23% of the shares of the Makhado project, where CoAL will retain majority ownership in a part debt structure, and its black economic-empowerment (BEE) shareholder 26%.

While 6% of the BEE holding will be available as an employee share ownership plan, the percentage may also be used to create black industrialists in line with government aims.

The proposed 16-year, opencast Makhado mine is being designed to produce 2.3-million tons of hard coking coal a year and 3.2-million tons of thermal coal a year.

Front-end work on the Vele plant modification project is being engineered by project house Sedgman and the Makhado project has received environmental authorisation under National Environmental Management Act and the environmental-impact assessment (EIA) regulations from the Limpopo provincial government.

In the 12 months to June 30, CoAL repaid the remaining $12.5-million of its bank facility from Deutsche Bank and secured a $21.4-million, 18-month credit facility from Investec Bank, and legacy issues that have plagued its ability to create value for the last few years have been removed.

CoAL has finalised the public participation for EIA phases for the Generaal, Chapudi and Mopane projects, which form part of the long-term greenfield Greater Soutpansberg project.

Blackspear, which wants to operate and develop a portfolio of coal assets in South Africa's Mpumalanga province, already reportedly owns the Puleng mine in Middelburg, the Thutsi mine in Ermelo and the Overvaal project in Ermelo.