Wescoal acquire Pegasus Project
11/29/2011 | 03:49am US/Eastern
Johannesburg, 28 November 2011 - Wescoal Holdings
Limited (JSE: WSL) today announced an offer to acquire from
HSTI 17 Proprietary Limited ("HSTI"), 51% of the issued
ordinary share capital of EZIM and 51% of EZIM's liabilities,
which as has been accepted by HSTI.
EZIM owns the prospecting right in relation to Mineral Area 2
(a portion of Mineral Area 1) of the farm Geluk 276,
Registration Division JS, Mpumalanga Province, measuring
919.0666 hectares; and the surface rights in relation to
portion 2 of the farm Geluk 276, Registration Division JS,
Mpumalanga Province, measuring 250 hectares, registered under
Deed of transfer number T80810/89) ("Pegasus project").
The Pegasus project was previously owned by BHP Billiton
Energy Coal South Africa. The project is an undeveloped
metallurgical and export quality thermal coal deposit with a
measured resource of approximately 15 million tons and is
situated 10 km from Witbank contiguous to the ExxaroInyanda
colliery.Pegasus is a shallow coal deposit with an average
strip ratio of 1,46, comprising the number 2 upper, number 2
lower and number 1 coal seams of the Witbank coalfields.
"The acquisition of 51% of the Pegasus project is in line
with Wescoal's stated goals of securing high quality coal
resources that can be mined by the opencast method to
increase production and sustainability," said Andre Boje, CEO
of Wescoal Holdings Limited.
It is anticipated that Pegasus will come on stream during
2014 and will continue for 8 to 10 years thereafter. The main
product of the project will be a low-phosphorus coal that
will be sold into the metallurgical industry thereby
commanding a price premium and the coal not meeting the
required specifications will be sold into the export market.
The ultra low stripping ratio will result in low cost
opencast mining and will ensure the project is at the low end
of the cost curve.
"There was intense competition from local and international
mining companies to secure the Pegasus project as the reserve
is known industry wide as the last great coal resource
available in the Witbank and Middelburg coalfields," said
An independent high-level valuation of the Pegasus project
commissioned by Wescoal and conducted by Mineral Corporation
Consultancy (Pty) Ltd. ("Mincorp"), based on the Monte Carlo
simulation indicates a current value range of R593 million to
R946 million. The valuation further indicates that, with
additional capital investment to bring the project into full
production, the valuation as an operating concern could be
significantly increased. The transaction is a related party
transaction, as Mr R Ramaite and Mr W Khumalo, who hold the
position of Chairman and non-executive director of Wescoal
respectively, have a financial interest in HSTI.
Jointly Wescoal and HTSI are engaging local and international
companies who have expressed interest in acquiring the
balance of 49% of the project and who will bring the
necessary financial support to develop the project.
"We are excited about this project," said Boje. "As Pegasus
will contribute to the long term sustainability of Wescoal as
we drive the business model of higher margins forward."
"We are assessing various other opportunities for which we
remain under cautionary, however we remain driven by our
focus to supply ESKOM and elevate overall margins within
Wescoal to a higher level," concluded Boje.
Issued on behalf of:
Wescoal Holdings Limited
Andre Boje, CEO
+27 11 954 2721
Compiled and released by:
+ 27 82 331 8158