Emerging thermal coal-mining company Universal Coal, which owns a number of projects in South Africa, is aiming to tap equity market support by listing on the ASX by October, seeking to raise about A$25-million through an initial public offering. Universal Coal executive chairperson Dr Tony Harwood said last week that the funds from the capital raising would be used primarily to start developing its Kangala project, in the Witbank coalfield, in Mpumalanga, and further advance the company?s two remaining thermal coal projects in the Witbank area. The company expects to have a market capitalisation of around A$80-million when it lists. ?The funds will be used, initially, to have the three-million-ton-a-year Kangala thermal coal deposit in development mode by the end of this year and to move the nearby Roodekop and Brakfontein thermal coal deposits through completion of feasibility studies and into production from 2012,? he said. He added that the company had set a near-term total production aim of six-million tons a year within three years as it has around 700-million tons of on-site export and domestic-quality thermal and coking coal resources, with additional contiguous areas under application. ?The three deposits rank as low-cost, high-margin assets, with mining to be openpit [and product to be] exported through the close proximity and extensive existing infrastructure.? The company also has the option of exporting its output through the Richards Bay, Maputo and Durban ports. Further, Harwood noted that the Kangala deposit met the domestic coal quality standards demanded by South African power utility Eskom and would also service demand by local cement, steelmaking and private power producers. ?The deposits have low moisture, low sulphur, and low ash, which is the mineral makeup favoured by Indian power producers ? with our export ports on the east coast of South Africa well placed to service the Indian and Asian markets. We have already enjoyed strong interest from potential Indian customers for offtake, joint venture and project sales from Kangala and the other deposits,? he added. Harwood concluded that the initial public offering was expected to appeal to Australian investors who would understand Kangala?s high-quality resource and operating costs of around A$13/t. The company expects to start developing its second deposit, Roodekop, by the end of 2011 and the third deposit, Brakfontein, by 2012 to achieve the coal production build-up target of six-million tons a year by 2014.
Edited by: Martin Zhuwakin
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