JOHANNESBURG (miningweekly.com) – Black-empowered coal mining and trading company Wescoal, which is raising R81-million equity capital to further develop its flagship Elandspruit colliery, is taking steps to be a key player in the consolidation of South Africa’s junior coal-mining arena.

Robinson Ramaite, chairperson of the JSE-listed company, told a media conference in which Creamer Media’s Mining Weekly Online participated that the company’s ability to operate and its black economic-empowerment (BEE) credentials put it in a strong position in the area of mergers and acquisitions (M&A).

“We want to be the first empowered coal junior to comply with Eskom’s 51% black ownership and be an example to the country,” Ramaite said. (Also watch attached Creamer Media video).

Wescoal currently produces 2.5-million tons of coal a year under acting CEO Waheed Sulaiman and is aspiring to reach four-million tons a year by April 2016

“In very simple terms, we’re looking at mergers with some of the existing juniors as well as acquisitions of others,” 46-year-old Ramaite said.

Some opportunities, if executed, could increase the life-of-mine of the company’s existing Khanyisa and Intibane collieries, which are both close to Eskom’s Kendal and Kusile power stations.

Black interests currently hold more than 30% of Wescoal and moves are afoot to increase that shareholding to 51% by December 2016.

In the equity capital raising move, the Simeka Group, which Ramaite also chairs, will be following its rights to the tune of R40-million.

“We’re very heavily involved in discussions and we’re hoping that, in the next few weeks, some of those will come out into the public domain,” he said, adding that the company was certainly not the only junior active in M&A negotiations.

The company was excited about the prospects and optimistic that the M&A talk was about to be converted into action.

The current poor state of commodities markets had prompted some companies to place their assets on the market and Wescoal saw itself as a major taker of such opportunities.

To do that, it would have to be ready from a funding point of view.

To date, it has self-funded growth projects from its own operating cash flows; however, internally funded growth had reached a point that now required alternative capital sources to allow for continued development.

On top of that, long-term bank funding, which was dependent on the conclusion of long-term Eskom contracts, had been delayed, which had brought about the decision to pursue a combined claw-back and rights offer to shareholders at a subscription price of 138c a share on 58 890 389 new ordinary shares.

The company said its rights issue was aimed at securing funding for mining as a marking time measure ahead of bank funding once long-term Eskom contracts were finalised.

It added that 80% of its coal reserves were of the resource type that met the requirements of Eskom and the business was thus continuing to build itself around the State power utility.

It said that its Elandspruit project was already feeding the company’s new processing plant, which had a throughput target of 170 000 run-of-mine tons a month by December 31. (Also watch attached Creamer Media video).