Wescoal settles on R65m capital raise

JOHANNESBURG (miningweekly.com) – South African coal-mining and coal-trading company Wescoal, which last month announced its intention to raise R81-million equity capital to further develop its flagship Elandspruit colliery as well as fund other growth options, has seemingly settled on a maximum of R65-million by way of a renounceable combined clawback and rights offer.

The JSE-listed company, headed by chairperson Robinson Ramaite, said in a Stock Exchange News Service announcement on Tuesday that the terms of the combined clawback and rights offer had been finalised, with all conditions precedent fulfilled.

The combined clawback and rights offer would proceed at a pace set out in a lengthy declaration announcement and timetable.

Involved is the offering of 49 041 904 new ordinary shares to qualifying shareholders in the ratio of 23.78944 combined clawback shares for every 100 Wescoal ordinaries at an issue price of 132c for every combined clawback and rights offer share.

Simeka Capital has committed to fully subscribe for 30 303 030 new ordinary shares.

Wescoal has had a tradition of self-funding growth from its own operational cash flows.

However, as a consequence, it has experienced a strain on its free cash flow position, which is inhibiting further growth potential, as was reported by Mining Weekly Online last month.

On top of that, long-term bank funding, which is dependent on the conclusion of long-term Eskom contracts, has been delayed, which brought about the decision to pursue the combined clawback and rights offer to shareholders at a revised subscription price and with fewer new ordinary shares on offer.

The board’s decision not to declare a final dividend was based on opting to use available cash to develop mining assets such as Elandspruit, which is feeding the company’s new processing plant that has a throughput target of 170 000 run-of-mine tons a month by December 31.

Wescoal is taking steps to put a revitalised executive team in place while the company evolves its long-term strategy on the Eskom requirement of 50%-plus black ownership for long-term coal supply contracts.

Eighty per cent of Wescoal’s reserves are of the resource-type that meets the requirements of the State power utility and the business is thus continuing to build itself around Eskom’s requirements.