LONDON (Alliance News) - Coal of Africa Ltd Friday reported a narrower pretax loss for the first half of its financial year on the back of a foreign exchange gain from the devaluation of the South African rand, and said it is a step closer to securing a new order mining right for the Makhado coal project after finalising a deal with the broad based black economic empowerment partners.
The coal exploration, development and mining company operating in South Africa reported a pretax loss of USD120,000 for the six months ended December 31, substantially narrower than the USD24.9 million loss reported in the first half of fiscal 2014.
The company, which generates little in revenue, booked a USD14.3 million gain on foreign exchange arising from the translation of inter-group loan balances, borrowings and cash due to changes in the South African rand and Australian dollar exchange rate during the period, compared with a USD12.6 million loss a year earlier.
Depreciation and amortization costs, lease costs and employee expenses fell, partially offset by a USD5 million rise in other expenses during the period.
Coal of Africa reported an operating profit of USD346,000 in the period, swinging from a USD25.1 million loss.
At the end of December, the company reported a stronger cash balance of USD20.6 million, more than ten times its balance at the end of fiscal 2013 after shareholders approved a two stage equity placement of up to 695 million shares for GBP0.055 in the period.
In a separate statement, Coal of Africa said it has reached an agreement with the broad based black economic empowerment partners, which will result in the partners acquiring a 26% stake in the Makhado hard coking and thermal coal project as required under South African law for the company to obtain a new order mining right.
Of the 26% stake to be acquired, local communities will get a 20% stake, with the remaining 6% being acquired by Yoright Investments (Pty) Ltd, a company formed by black entrepreneur Mike Nkuna whose shareholder grouping will include historically disadvantaged South Africans and other black entrepreneurs, further expanding the parner shareholding in the project, it said.
"The acquisition of 26% of the Makhado project by road based black economic empowerment partners parties is a critical step to obtaining the Makhado project mining right," said the company.
Coal of Africa will hold the remaining 74% shareholding in the project.
The company's shares were trading 6.7% higher on Friday morning at 1.63 pence per share.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
