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The buzz 15 Jul 2016

Re: UC - RNS Unfortunate but not unexpected. CZA should be higher than 3p though - especially as the price of thermal coal continues to rise. Trading sill at 3.01-3.1p, but there seem to be more buys than sells. For me I would considertopping up at below 3p as I already have quite a few. Update - another load of buys just went through so the spread is now 3.02-3.25pThe B

olddrongo 15 Jul 2016

UC - RNS UC offer terminated

2bozmo 15 Jul 2016

Chinese consortium to invest $2.8 billion in S Africa industrial zone Interesting....[link]

2bozmo 14 Jul 2016

Thoughts So speaking with company this morning, they have been "evaluating target company's assets" i.e Kangala. Obviously if Universal signs deal with Eskom by 15th then we'll take that whole company. There's no point in taking NCC with no off take agreement as we're after a cash generating asset, and there's little incentive to find this working capital if means additional debt or dilution with no immediate upside. We have until August 3rd to issue shares for this purpose otherwise we will need to have another company AGM or EGM and resolution. I remain cautiously optimistic that setting 15th as a strong incentive with deadline meaning either Eskom/UC deal is done or a deal involving Kangala assets.

HPC Follower 13 Jul 2016

Re: JSE 74 ZAr or 3.95p I don't think many will buy/sell until the UC deal is done/or not; but if the UC coal quality is good then they should be able to agree terms with Escom - who do need guaranteed supplies.The 15th July is the deadline... so we will hear more in the next two days - a YES, NO or an extension if very close and just a few more days are needed for the formalities.

The buzz 13 Jul 2016

Re: JSE 74 ZAr or 3.95p Price just moved (not shown by iii yet) to 3.4-3.75p - but cannot see any trading on the LSE. Back to speculation - this is the level that I was predicting that CZA might go to if the deal did not go through - or are there some tentative signs that something might happen. On the other hand I am a bit remote from Eskon, but my 'gut' feel is that this is a politically driven, civil service type beast that has so much inertia that it just drifts into chaos.One thing is certain - there is a resurgent price for coal - well up yesterday:-[link] if Eskom is not careful they may overplay their hand and run short of coal. Perhaps with the threat of the CZA deal not going through and potentially lower thermal coal production might be forcing their hand to sign a deal with Universal Coal. Without that deal in place UC is not worth very much.Is someone reading this as I type? Some unseen hand has moved the price back to 3-3.7p, but a buy of 105k at 3.75p a share has just gone through.The B

The buzz 12 Jul 2016

Re: JSE 74 ZAr or 3.95p So far today a bit of recovery as now 3-3.75p but negligible trading.The key differences between now and November are that the price of coal and risk appetite for miners has gone up, but CZA will have incurred legal expenses pursuing the take-over. I lost track of fund raising so there might be a bit more money in the coffers as well. So yes the share price ought to be similar or slightly above the November levels. So I guess that the share price will settle at the 3.5 - 4p level on that basis ... if not slightly higher.The B

hedger123 11 Jul 2016

JSE 74 ZAr or 3.95p As AIM specs panicked out (why ffs), the JSE was calm and had steady buying closing at equivalent of 3.95p. It's not like we rallied strongly when the UC deal was announced, indeed we drifted lower over the next few weeks, and now there's no reason for us to move lower if this deal doesn't go ahead. I maintain this is a bear trap, market makers have filled their boots today, and with rally into close in London today we can keep going higher. What do SA know that we don't?

hedger123 11 Jul 2016

Do we want UC? Ultimately we want an income generating asset. When we made the offer in Nov 2015 we believed NCC would have an agreement with Eskom. This has failed tomaterialise. Personally I would say to UC that the deal in its current format is off but we'll cherry pick the assets we want. So we could take Kangala and ultimately NCC if and when a deal is done. UC will lose about half its value if this deal falls through so is it ultimately still in best interests of CoAL to pursue this deal? Ultimately has NCC/Eskom made this uneconomic to pursue?

2bozmo 08 Jul 2016

Didn't expect that.... If we wanted to pursue Universal then we could easily have extended deadline further. Possible outcomes:1) NCC cuts a short term deal with Eskom that will meet our 12-month requirements and meet AIM requirements. Eskom paying over the odds so deal could be made.2) we have a number of parties interested in Makhado, one of those (or someone else, eg. Ichor) provides working capital to meet AIM requirements;3) we forget Universal deal. The market didn't react when we announced the deal in November, a few London specs sold out today hence lower but more interested in buying dip on JSE which closed only 4 ZAr lower at equivalent of 3.90p;Remember this is a reverse takeover and we still have great assets in Makhado, Vele, Mooiplaats and GSP, which by themselves should be valued at more than the current share-price. Could argue the Universal deal has been holding back the current CZA share price given performance of thermal coal and dilution.I've met David Brown a number of times and trust him and management team. He's still confident today this deal gets done, and setting a deadline of 15th means management sit around the table and hammer something out. Yes we could have extended deadline and CoAL must have a reason. Yes, we would have had to have had another EGM to allow issuance of shares past 3 August deadline but is that such a hardship to get assets? Overall this fixed deadline isn't necessary a bad thing. It's definitely going to be interesting next week.

ianio 08 Jul 2016

Re: RNS Condition (d) Found it....[link] African coal mining executives said proposals by Eskom aimed at ensuring the quality of coal it consumes would make it more difficult to practically supply the fuel to the utility’s power stations.Eskom last week unveiled a series of new rules for suppliers of coal that included paying an upfront fee intended to motivate coal miners to guarantee the quality of their coal.Coal quality testing would also be moved to the power station which would replace the current system in which coal miners are granted pre-certification at the mine. Whilst new suppliers would also be asked to fall in with the new rules, existing suppliers would have to re-negotiate their contracts.Eskom said last week that it had “… experienced numerous coal quality challenges with various suppliers, including long-term tied colleries.“To mitigate this exposure, Eskom has, over time, improved on coal quality monitoring, assurance and lately risk transfer. A number of changes are being considered and will be implemented for all new contacts and renegotiated for all contracts,” it said.It also said it would withhold “… payment or coal price adjustment in the even that coal quality at the delivery point is inferior to contractual qualities”.But perhaps the most important innovation was the “… upfront payment of a quality deposit by suppliers to Eskom”. Including black economic empowerment demands that now require new suppliers to be 50% empowered, executives said the proposals threw up another barrier to business.“These are some of the new issues being put on the table by Eskom,” said Waheed Sulaiman, CEO of Wescoal Holdings which is negotiating a coal sales agreement (CSA) currently for supply of coal from its newly developed Elandspruit mine in Mpumalanga province. “They [Eskom] are making it harder to conclude a long term contract,” he said.“The idea of a deposit paid by a supplier does appear to be out of kilter with market norms,” said David Brown, CEO of Coal of Africa (CoAL). CoAL is in the process of buying Australian firm, Universal Coal, which supplies up to two million tonnes of coal annually to Eskom from its Kangala colliery.“The process does appear to have some logistical challenges,” Brown added. “The pre-certification process at point of supply versus as the power plant does make more sense,” he said, adding that certifying the coal quality at the plant would end up with “… trucks of coal going back and forth a bit”.Bevan Jones, one of the founders of GlobalCOAL, and now running an investment portfolio at Thebe Investment Group, said it didn’t make sense for suppliers to put down a quality deposit.Eskom consumes about 120 million tonnes a year of coal and lists the fuel as among its most important cost components when calculating its application for tariff increases. As part of a rejig of how the tariff is calculated, the National Energy Regulator of South Africa has asked Eskom to account for its coal cost and qualities on a station-by-station basis.Mandi Glad, CEO of Keaton Energy, said the proposals were impractical. “Were these proposed changes to be implemented it would certainly make management of the CSA more challenging rather than negotiation of the CSA more problematic.“Practically I cannot believe that Eskom could get these changes to fly for existing CSAs. I struggle even to imagine that they could work for new contracts,” she said.It was coal quality, as well as cost, that stood at the heart of two disputes Eskom had with Glencore and Exxaro Resources over the supply of coal from the Optimum and Arnot colleries respectively.

hedger123 08 Jul 2016

Today's RNS Having had some e-mail exchanges with the company this morning, it appears that this deal is still very much alive. “We are confident that we should close out our funding opportunities next week, but until it is a done deal one can never be a 100% certain as we not in control of all the aspects of our funding. It should be noted that the funding requirement has in the most part come about because of the lack of the Eskom contract which should have been completed in December last year and NCC should have already be in production. . Both teams will be working diligently to secure a positive outcome.” I questioned why they didn’t just extend it like they did previously. They would need to refresh the EGM approved resolutions which would take another month at least so wanted to keep all feet to the fire. He seemed positive the deal will get done, and drawing a direct line in the sand is potentially very positive to getting it done. If there was no chance then they would have just said no dea

ianio 08 Jul 2016

Re: RNS Condition (d) I am sure someone highlighted an article a few weeks ago regarding the difficulties of getting ESKOM to sign agreements. Think it may have been in Mining Weekly. Struggling to find it now, but obviously some truth in it.

HPC Follower 08 Jul 2016

Re: RNS Condition (d) Your interpretation looks about right to me; and there doesn't seem to be much willingness to increase the timescales again - especially if Universal is worth a lot less without an Eskom supply agreement; depending on the reasons of course.Pressures are increasing as harder deadlines get closer.

ianio 08 Jul 2016

Re: RNS Condition (d) That's pretty much my interpretation of the situation Buzz.Lets not ask Bozmo though, as his pipeline to confirmation of the situation is looking a little shaky....Not a great situation, but far from our darkest hour. We live to fight another day whatever the outcome

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