Mining firm seeks to raise R3.5bn
State-owned mining company African Exploration Mining and Finance Corporation wants to raise R3.5 billion to be able to expand its portfolio.
|||Johannesburg - State-owned mining company African Exploration Mining and Finance Corporation (AEMFC) wants to raise R3.5 billion to be able to expand its portfolio and operate two of its assets in Mpumalanga.
Sizwe Madondo, the chief executive, said yesterday that the company was working with Nedbank to raise the funds, which would help develop the assets.
Madondo said negotiations with the bank were at an advanced stage.
“The T-Project will alone need R3bn and Klippoortjie will need R0.5bn as capex to get the projects up and running in the next two years,” Madondo said.
The Klippoortjie Mine is a planned opencast mine in Ogies and T-Project an underground coal operation, which is expected to supply Eskom’s Kusile power station.
“That is a lot of money taking into account that we do not get support from the National Treasury. Coal prices are depressed and lenders are not comfortable with allocating funds,” Madondo said.
AEMFC was established to secure South Africa’s energy supply through the mining of coal in its operations in Vlakfontein Mine in Mpumalanga, which was opened with much fanfare in 2011.
It holds several prospecting rights across the country.
Madondo said the feasibility study had been completed at the Klippoortjie Mine 4km outside Vlakfontein.
Feasibility
The study had shown good coal qualities that allow for blending with existing coal to materially improve margins and also offer a diversified coal product and sales.
“Our target is that in the next two years we will have our asset in Mpumalanga fully operational,” Madondo said.
He said AEMFC wanted to grow its portfolio through the acquisition of existing mines and entering into partnership with other mining entities with a similar interests.
“We came late into the mining sector and for us the strategy is to look at entering into partnerships and acquisitions of mines particularly in coal as it is a strategic asset. Nothing is stopping us from expanding into other metals,” he said.
It was reported yesterday that Coal India, the Indian state-owned coal mining company headquartered in Kolkata, had approved the signing of a pact with AEMFC for the acquisition of coal mines.
Madondo said the company had not signed any memorandum of understanding with the company.
“We have not signed anything with Coal India. They approached us to form partnerships in future ventures to pursue future opportunities. We said we would look into the matter and have not received approvals from our shareholders, including the Department of Mineral Resources. They see us as an ideal partner with which to pursue future growth prospects.”
In terms of financial performance, revenue for the financial year to March 2015 increased by a modest 2 percent to R235.4 million from R230m in the prior year driven mainly by decreased sales volumes to Eskom.
Despite the challenges experienced, the company made a profit after taxation of R13.4m in the financial year to March 2015 from a profit of R33.4m in the prior year.
BUSINESS REPORT