Computacenter PLC

Business and Financial Review • May 1, 2014

National Storage Mechanism | Additional information

You don't have Javascript enabled. For full functionality this page requires javascript to be enabled.

CONTINENTAL COAL LTD - Quarterly Report

PR Newswire

London, May 1

30 April 2014 REPORT FOR THE QUARTER ENDED 31 MARCH 2014Continental Coal Limited ("Continental" or "the Company") is pleased to provideits operations report for the quarter ended 31 March 2014.COMPANY HIGHLIGHTS * Operations + Significant revenue received from the ABSA Hedge during the Quarter + Penumbra production on track to achieve design capacity + Vlakvarkfontein on track to meet production and cost guidance * Corporate + Completion of a A$5 million bridge finance facility and broader recapitalisation and restructuring of the Company + The Investors of the bridge finance facility have also undertaken to assist the Company in undertaking a rights issue currently proposed to raise up to A$31.7 million + Following the closing of the bridge finance facility in February 2014, Board and management changes were implemented1. OPERATIONS1.1 Health and SafetyDuring the Quarter, three Dressing Station Case ("DSC") accidents were reportedat the Company's mining and processing operations - all three DSC accidentswere relatively minor incidents reported at the Penumbra Underground Mine withnone reported at the Vlakvarkfontein Mine and Delta processing facility. Theaccidents had no material impacts and their causes are being addressed.1.2 Operational performance Operational performance (tonnes) Quarter ended Quarter ended 9 months ended 9 months ended 31 March 2014 31 March 2013 31 March 2014 31 March 2013Run of Mine (ROM)productionVlakvarkfontein 270,141 412,764 999,124 1,148,512Ferreira - 165,917 247,129 423,954Penumbra 119,123 52,876 342,450 53,567Total ROM 389,264 631,557 1,588,703 1,626,033productionFeed to plantFerreira - 163,926 269,670 488,693Penumbra 123,098 58,606 339,499 61,300Total feed to plant 123,098 222,532 609,169 549,993Export yieldsFerreira - 71.3% - 69.6%Penumbra 55.9% 38.1% 55.8% 37.8%Export coal buy-in 10,831 - 31,784 -Domestic sales 327,727 349,911 1,040,351 997,652Export sales 121,157 113,760 441,853 323,510Total sales 448,884 463,671 1,482,204 1,321,162Total ROM coal production for the Quarter of 389,264t was achieved from theVlakvarkfontein and Penumbra Coal Mines. Mining at the Ferreira Coal Mineceased last quarter as previously reported.Feed to the Delta Processing Operations for the Quarter of 123,098t wasachieved from the Penumbra Coal Mine and was similar to the last quarter feedfor this mine (being 120,872t). The increase from the comparable quarter in2013 and on a year-to-date basis for the 9 months ended 31 March 2013 is inline with the ramp up of the Penumbra Coal Mine.Export yields at the Penumbra Coal Mine have shown a steady increase during thepast 9 months with the average yield of 55.8% recorded for the quarter.Domestic sales remain similar to the previous quarter, the comparable quarterin 2013 and on a year-to-date basis.1.3 Vlakvarkfontein Coal MineVlakvarkfontein Coal Mine produced 270,141t ROM for the Quarter, which is lowerthan the comparable quarter in 2013 and on a year-to-date basis. The reducedROM is due to only mining what can be sold and reducing the stockpiling as thecoal has been burning.An average strip ratio of 2.11:1 was achieved for the Quarter (2.18:1 YTD).Total thermal coal sales during the Quarter from the Vlakvarkfontein Coal Minewere 327,724t and comprised 258,042t to Eskom and 69,682t of non-select coal.Sales for the 9 months ended 31 March 2014 of 837,474t to Eskom were abovebudget with non-select coal sales of 202,874t being below budget.Free-on-Truck (FOT) costs for the quarter were ZAR115/t (US$11.17) which waslower than the budgeted cost of ZAR131/t (US$12.72) for the Quarter. FOT costsfor the 9 months ended 31 March 2014 were ZAR153/t (US$14.86) which was thesame as budgeted for the period.Vlakvarkfontein remains on target to achieve its planned production of 1.3 MtROM at a cost of ZAR153/t (US$14.86) for FY2014.1.4 Ferreira Coal MineInventory clean-up at the Ferreira Coal Mine has been completed. Therehabilitation work will commence upon finalisation of the closure plan andappointing contractors.1.5 Penumbra Coal MineROM coal production at the Penumbra Coal Mine for the Quarter totaled 119,123t.As previously reported the Company has encountered stone rolls that aredisplacing the coal seam in the current mining area and this is impacting onthe production rate and the delivered yield due to added contamination.Management, in conjunction with mining consultants, have been reviewing theplanned production lay-out in order to mitigate the impact of the stone rollson the production rate of the continuous miners.Export yields at Penumbra have been steady during the quarter with the averageyield of 55.9% recorded. The yield is expected to improve to the planned 62%with the increase in production and the mitigation of the additionalcontamination caused by the stone rolls.Mining costs of ZAR166/t (US$16.12) ROM were similar to the costs achieved inthe prior quarter with FOB costs of ZAR745/t (US$69.97) recorded for theQuarter. Total FOB costs will likely reduce in the coming months given theforecast increase in production.Penumbra is forecasting the delivery of 570,000t ROM during the 2014 financialyear at a FOB cost of ZAR680 (US$63) per sales tonne.The Company received ZAR 1.7 million revenue for the quarter from the ABSAforward hedging contract at Penumbra.2. DEVELOPMENT PROJECT2.1 De Wittekrans Coal ProjectThe Integrated Water Use License (IWUL) application has been submitted and theCompany awaits approval expected Q2 2014.During the quarter site specific geological models with wash results were builtto show the separate upper and lower extents of the B and C seams withinproposed shaft site positions.3. EXPLORATION PROJECTS3.1 Botswana Coal ProjectsThe Company is in advanced discussions in respect of the two remainingProspecting licenses (PL 340/2008 and PL 341/2008). Further details will beadvised when negotiations are concluded. PL339/2008 was relinquished during thequarter.4. CORPORATE4.1 Bridge finance and recapitalisationDuring the Quarter the Company completed a A$5 million bridge finance facilitywith UK corporate advisory firm Empire Equity Limited and has undertaken abroader recapitalisation and restructure of the Company and its financialarrangements. The Company made key payments to current creditors and negotiateda 3 month standstill period to recapitalize the Company and restructure itsfinancial arrangements. Upon completion of the bridging finance, the Companyimplemented changes to its Board of Directors as announced during the quarter.The Investors of the bridge finance facility (being Empire Equity and/or itsnominees) have further undertaken to assist the Company in undertaking a rightsissue currently proposed to raise up to A$31.7 million with terms to bedetermined by the Company and the underwriter engaged. The proceeds will beused to settle amounts owed by the Company to various existing convertible noteholders and other major creditors.The management structure of the Company moving forward is still beingconsidered by the reconstituted Board, but will initially be overseen by MrLandau and Dr D'Sylva in temporary executive roles as well as current COO MrJohan Heystek at an operational level.Importantly, the Company will focus on and ensure stability at an operationallevel with the Company's current mining operations whilst saving significantcosts at the corporate level. As part of the restructure process, Continentalwill look to strengthen its BEE credentials in South Africa and generateadditional synergies with key strategic partners including Eskom, Transnet andRBCT to ensure a significant growth profile moving forward.The reconstituted Board of Directors have complete faith in the assets andoperational management of the Company, and are optimistic that a range ofstrategic and financing opportunities will be advanced so as to stabilise theCompany's balance sheet and focus on significant growth following completion ofa proposed rights issue.The reconstituted Board of Directors has received interest from a number ofglobally recognised energy investors/traders to participate in the Companygoing forward, and terms are currently being negotiated.The company is well advanced in finalising its proposed underwritten rightsissue and will shortly be providing full details to its shareholders.4.2 Proposed listing on the Johannesburg Stock ExchangeThe proposed listing has been postponed until such time as the recapitalisationof the Company has been completed.4.3 ASX and AIM share trading suspensionAs at the date of this report Continental's securities on both the ASX and AIMmarkets continue to be suspended. The reconstituted Board of Directors willconsider a decision on seeking to lift the suspension of the shares pending theprovision of further clarification of its financial position to the market.Peter LandauInterim Executive DirectorFor further information please contact:Media (Australia)David TaskerProfessional Public RelationsT: +61 8 9388 0944Nominated AdvisorOliver Morse / Trinity McIntyreRFC Ambrian LimitedT: +61 8 9480 2500BrokerJonathan WilliamsRFC Ambrian LimitedT : +44 203 440 6817About Continental Coal LimitedContinental Coal Limited (ASX:CCC/AIM: COOL) is a South African thermal coalproducer with a portfolio of projects located in South Africa's major coalfields including two operating mines, the Vlakvarkfontein and Penumbra CoalMines, producing approx. 2Mtpa of thermal coal for the export and domesticmarkets. A Feasibility Study was also completed on a proposed third mine, theDe Wittekrans Coal Project with a mining right granted in September 2013.Competent Persons StatementThe information in this release that relates to Coal Resources onVlakvarkfontein, Vlakplaats and Wolvenfontein is based on resource estimatescompleted by Dr. Philip John Hancox. Dr. Hancox is a member in good standing ofthe South African Council for Natural Scientific Professions (SACNASP No.400224/04) as well as a Member and Fellow of the Geological Society of SouthAfrica. He is also a member of the Fossil Fuel Foundation, the GeostatisticalAssociation of South Africa, the Society of Economic Geologists, and a CoreMember of the Prospectors and Developer Association of Canada. Dr. Hancox hasmore than 12 years' experience in the South African Coal and Mineralsindustries and holds a Ph.D from the University of the Witwatersrand (SouthAfrica).The information in this release that relates to Coal Resources on Penumbra, DeWittekrans, Knapdaar, Leiden and Wesselton II is based on coal resourceestimates completed by Mr. Nico Denner, a full time employee of Gemecs (Pty)Ltd. Mr. Denner is a member in good standing of the South African Council forNatural Scientific Professions (SACNASP No. 400060/98) as well as a Member andFellow of the Geological Society of South Africa. He has more than 15 years'experience in the South African Coal and Minerals industries.The information in this release that relates to Coal Resources on Project X andVaalbank is based on coal resource estimates completed by Mr. Coenraad vanNiekerk, a full time employee of Gemecs (Pty) Ltd. Mr. van Niekerk is a memberin good standing of the South African Council for Natural ScientificProfessions (SACNASP No. 400066/98) as well as a Member and Fellow of theGeological Society of South Africa. He has more than 38 years' experience inthe South African Coal and Minerals industries.The information in this release that relates to Coal Resources on Mooifonteinis based on coal resource estimates completed by Mr. Dawie van Wyk, a full timeemployee of Geocoal services (Pty) Ltd. Mr. van Wyk is a member in goodstanding of the South African Council for Natural Scientific Professions(SACNASP No. 401964/83) as well as a Member and Fellow of the GeologicalSociety of South Africa. He has more than 30 years' experience in the SouthAfrican Coal and Minerals industries.The Coal Reserves on Vlakvarkfontein, De Wittekrans and Penumbra is based onreserve estimates completed by Eugène de Villiers. Mr. de Villiers is agraduated mining engineer (B.Eng) Mining from the University of Pretoria and isprofessionally registered with the Engineering Council of South Africa (Pr.engno - 20080066). He is also a member of the South African Institute of Miningand Metallurgy (SAIMM Membership no. 700348) and the South African CoalManagers Association (SACMA Membership no. 1742). Mr. de Villiers has beenworking in the coal industry since 1993 and has a vast amount of production andmine management as well as project related experience.Forward Looking StatementThis communication includes certain statements that may be deemed"forward-looking statements" and information. All statements in thiscommunication, other than statements of historical facts, that address futureproduction, reserve potential, exploration drilling, exploitation activitiesand events or developments that the Company expects to take place in the futureare forward-looking statements and information. Although the Company believesthe expectations expressed in such forward-looking statements and informationare based on reasonable assumptions, such statements are not guarantees offuture performance and actual results or developments may differ materiallyfrom those in the forward-looking statements and information. Factors thatcould cause actual results to differ materially from those in forward-lookingstatements include market prices, exploitation and exploration successes,drilling and development results, production rates and operating costs,continued availability of capital and financing and general economic, market orbusiness conditions. Investors are cautioned that any such statements are notguarantees of future performance and actual results or developments may differmaterially from those stated. South Africa Australia T +27 11 881 1420 F +27 862064487 W T +61 8 9488 5220 F +61 8 9324 3400 W www.conticoal.com www.conticoal.com 9th Floor Fredman Towers, 13 Fredman Ground Floor, 1 Havelock Street, West Drive, Sandton 2196 Perth, WA 6005 PO Box 787646, Sandton 2146 PO Box 684, West Perth, WA 6872 Interim Executive Chairman: Dr Paul D'Sylva Interim Executive Director: Mr Peter Landau Non-Executive Directors: Mr Connie Molusi and Dr Lars Schernikau