Majority black-owned Scinta signs significant coal mining transaction
Scinta South Africa (Pty) Ltd (“Scinta”) is pleased to announce the conclusion of a R187 million transaction, in which Scinta will acquire the Davel mining right from South32 (“the Davel Right”). As part of the transaction, Scinta has also acquired the Ermelo Mines infrastructure, railway loop and discard dump. Certain historical liabilities related to the assets being acquired, have been assumed by Scinta as part of the agreed purchase price.
It is estimated that the Davel Right contains more than 400 million tons of export and Eskom grade coal, with an anticipated yield in excess of 80%. Once in production, the Davel Mine will benefit from the existing rail and handling infrastructure at Ermelo Mines, which will allow Scinta to produce at a significantly reduced all-in cost of production. It is expected that Scinta will sustain a life of mine of over 50 years, during which time it is expected to produce at least 5 million tons of saleable product per year.
Scinta also envisages that more than 4 million tons of the existing discard dump at Ermelo Mines will be treated by it, with the product delivered to Eskom. This will allow for early positive cash flow from the project.
Scinta is a 51% black owned company, with Dr Humphrey Mathe as its Chairman. The company’s shareholders include Mathe as well as Zungu Investments Company (Pty) Ltd.
Sandile Zungu, a director of Scinta and executive Chairman of Zungu Investments Company says, “We have worked for some years to put this important transaction to bed, and would like to thank South32 for their commitment to Scinta and perseverance on the transaction.”
Scinta Chairman, Humphrey Mathe, adds, “the acquisition of the Davel mining right is not only significant for Scinta, but provides positive momentum for the South African mining sector’s transformative process.”
This transaction also bodes well for supply of coal to Eskom, which has indicated that its suppliers should be 50% + black owned.
Scinta was advised by Bravura Capital, an independent investment banking firm specialising in corporate finance and structured solutions.
Catergories: B-BBEE, Mining, News, Transactions
Published: May 29th 2017