Strictly private and confidential
Information Memorandum, Pre-IPO Capital Raising01 February 2011
LontohCoal Limited(Incorporated in the Republic of South Africa)
{Registration number 2008/016272/06}
Important Notice and Disclaimer
Certain statements made in this presentation, including, without limitation, those concerningthe economic outlook for the coal mining industry, expectations regarding coal prices,production, production costs and other operating results, growth prospects and the outlookof LontohCoal‟s operations including the completion and commencement of commercialoperations of certain of LontohCoal‟s exploration and production projects, and its capitalresources and expenditure are forward‐looking.
Although LontohCoal believes that the expectations reflected in such forward‐lookingstatements are reasonable, no assurance can be given that such expectations will prove tohave been correct. Accordingly, results could differ materially from those set out in theforward‐looking statements as a result of, among other factors, changes in economic andmarket conditions, success of business and operating initiatives, changes in the regulatoryenvironment and other government actions, fluctuations in coal prices and exchange rates,and business and operational risk management. LontohCoal undertakes no obligation toupdate publicly or release any revisions to these forward‐looking statements to reflectevents or circumstances after today‟s date or to reflect the occurrence of unanticipatedevents.
Legal Notices
• South AfricaThe Company has represented and agreed that it has not offered and will not offer the ordinary sharesdescribed in this Information Memorandum to the public in South Africa (as defined in, and in accordance withthe terms of, Chapter VI of the South African Companies Act, 1973 (as amended)). Accordingly, such ordinaryshares may not be handed on, surrendered to, renounced in favor of or assigned to any person in South Africain any manner which could be construed as an offer to the public in terms of Chapter VI of the Companies Act,1973 (as amended).
The Offer described this Information Memorandum (the “Offer”) has not been registered with the South AfricanRegistrar of Companies, and there is no requirement to do so.
• United KingdomThe Company has represented and agreed that: (a) it has only communicated or caused to be communicated,and will only communicate or cause to be communicated, an invitation or inducement to engage in investmentactivity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (“FSMA”)) to personswho have professional experience in matters relating to investments falling within Article 19(5) of the FinancialServices and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21(1) ofthe FSMA does not apply to us; and (b) it has complied with, and will comply with, all applicable provisions ofthe FSMA with respect to anything done by it in relation to the ordinary shares in, from or otherwise involvingthe United Kingdom.
• New ZealandThis Information Memorandum supplement has not been prepared or registered in accordance with the SharesAct 1978 of New Zealand. Accordingly, each underwriter has represented and agreed that it (i) has not offeredor sold, and will not offer or sell, directly or indirectly, ordinary shares and (ii) has not distributed and will notdistribute, directly or indirectly, any offer materials or advertisements in relation to any offer of ordinaryshares, in each case in New Zealand, other than (a) to persons whose principal business is the investment ofmoney or who, in the course of and for the purpose of their business, habitually invest money or (b) in othercircumstances where there is no contravention of the Shares Act 1978 of New Zealand (or any statutorymodification or re-enactment, or statutory substitution for, the shares legislation of New Zealand).
Legal Notices
• Australia
This document does not constitute a Offering Memorandum or other disclosure document under theCorporations Act 2001 (the “Corporations Act”) and does not include the information required for a disclosuredocument under the Corporations Act. This document has not been lodged with the Australian Shares andInvestments Commission (“ASIC”) and no steps have been taken to lodge it with ASIC. Any offer in Australia ofthe ordinary shares under this Information Memorandum may only be made to persons who come within one ofthe categories set out in sections 708(8) and 708(11) of the Corporations Act, or otherwise pursuant to one ormore exemptions in section 708 of the Corporations Act so that it is lawful to offer the ordinary shares withoutdisclosure to investors under Part 6D.2 of the Corporations Act (collectively referred to as “Sophisticated andProfessional Investors”). As no formal disclosure document (such as a Offering Memorandum) will be lodgedwith ASIC, the ordinary shares will only be offered and issued in Australia to one of the categories ofSophisticated or Professional Investors. If a person to whom ordinary shares are issued (called an “Investor”)on-sells the ordinary shares in Australia within 12 months from their issue, the Investor may need to lodge aOffering Memorandum with ASIC unless that sale is to another Sophisticated or Professional Investor orotherwise in reliance on a Offering Memorandum disclosure exemption under the Corporations Act. Any personacquiring ordinary shares should observe such Australian on-sale restrictions.
Legal Notices
• European Economic Area Member StatesIn relation to each Member State of the EEA which has implemented the Offering Memorandum Directive (each,a “Relevant Member State”), an offer to the public of any ordinary shares may not be made in that RelevantMember State except that an offer to the public in that Relevant Member State of any ordinary shares may bemade at any time under the following exemptions under the Offering Memorandum Directive, if they have beenimplemented in that Relevant Member State: (a) to legal entities which are authorized or regulated to operatein the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest inshares; (b) to any legal entity which has two or more of (1) an average of at least 250 employees during thelast financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of morethan €50,000,000, as shown in its last annual or consolidated accounts; (c) to fewer than 100 natural or legalpersons (other than qualified investors as defined in the Offering Memorandum Directive) subject to obtainingthe prior consent of the representatives of any such offering; or (d) in any other circumstances which do notrequire the publication by the Issuer of a Offering Memorandum pursuant to Article 3 of the OfferingMemorandum Directive.
For the purposes of this provision, the expression an “offer of ordinary shares to the public” in relation to anyordinary shares in any Relevant Member State means the communication in any form and by any means ofsufficient information on the terms of the offer and the ordinary shares to be offered so as to enable aninvestor to decide to purchase or subscribe for the ordinary shares, as the same may be varied in that RelevantMember State by any measure implementing the Offering Memorandum Directive in that Relevant MemberState and the expression Offering Memorandum Directive means Directive 2003/71/EC and includes anyrelevant implementing measure in each Relevant Member State.
• JapanThe ordinary shares have not been and will not be registered under the Shares and Exchange Law of Japan (the“Shares and Exchange Law”) and each underwriter has agreed that it will not offer or sell any shares, directlyor indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means anyperson resident in Japan, including any corporation or other entity organized under the laws of Japan), or toothers for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to anexemption from the registration requirements of, and otherwise in compliance with, the Shares and ExchangeLaw and any other applicable laws, regulations and ministerial guidelines of Japan.
Legal Notices
• Hong KongThe ordinary shares may not be offered or sold by means of any document, other than (i) in circumstances which do notconstitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), (ii) to“professional investors” within the meaning of the Shares and Futures Ordinance (Cap. 571, Laws of Hong Kong) and anyrules made thereunder or (iii) in other circumstances which do not result in the document being a “Offering Memorandum”within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation ordocument relating to the ordinary shares may be issued or may be in the possession of any person for the purpose ofissue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to beaccessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than withrespect to ordinary shares which are or are intended to be disposed of only to persons outside Hong Kong or only to“professional investors” within the meaning of the Shares and Futures Ordinance (Cap. 571, Laws of Hong Kong) and anyrules made thereunder.
• SingaporeThis Information Memorandum has not been registered as a Offering Memorandum with the Monetary Authority ofSingapore. Accordingly, this Information Memorandum and any other document or material in connection with the offer orsale, or invitation for subscription or purchase, of the ordinary shares may not be circulated or distributed nor may theordinary share be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly orindirectly, to persons in Singapore other than: (i) to an institutional investor under Section 274 of the Shares and FuturesAct, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person, or any person pursuant to Section 275(1A), and inaccordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance withthe conditions of, any other applicable provision ofthe SFA.
Where the ordinary shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation(which is not an accredited investor) the sole business of which is to hold investments and the entire share capital ofwhich is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee isnot an accredited investor) whose sole purpose is to hold investments and each beneficiary of which is an accreditedinvestor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries‟ rights andinterest in that trust shall not be transferable for six months after that corporation or that trust has acquired the ordinaryshares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, orany person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2)where no consideration is given for the transfer; or (3) by operation of law.
Offer Overview and Important Dates
This Information Memorandum has been prepared and issued to provide qualifying investors with information
relating to an offer to subscribe for 60 000 000 LontohCoal ordinary shares at an issue price of US$0.50 per LontohCoal
ordinary share in terms of a Private Placement.
Opening date of the Private Placement at 08:00 on Tuesday, 01 February 2011
Closing date of the Private Placement at 17:00 on Tuesday, 15 March 2011
Applicants’ notification of success/failure of application Tuesday, 22 March 2011
Posting of Share Certificates and refund of surplus Tuesday, 29 March 2010
Minimum number of Ordinary Shares per Applicant 40 000
Price per Ordinary Share US$0.50
Minimum subscription payment per Applicant US$20 000
These dates are indicative only. The Company reserves the right to vary the Closing Date of the private placement of
ordinary shares completed herein, which may have a consequential effect on other dates. As such, the date the Shares
are expected to commence trading on Hong Kong Stock Exchange („HKEx‟) may vary with any change in the Closing
Date.
This Information Memorandum constitutes an offering of the shares described herein only in those Jurisdictions and to
those persons where and to whom they may be lawfully offered for sale, and therein only by persons permitted to sell
such shares. This South African Information Memorandum is not, and under no circumstances is to be construed as, an
advertisement or a public offering of the shares referred to in this document in South Africa. The Registrar of Companies
or similar authority in South Africa has not reviewed or in any way passed upon this Information Memorandum or the
merits of the shares described herein and any representation to the contrary is an offence.
Offer Overview and Share Capital Structure
Offer Price per Share US$0.50
Shares on issue prior to this Offer 175,000,000
Number of shares to be offered under this Offer: Maximum Aggregate Subscription 60,000,000 Minimum Aggregate Subscription 30,000,000
Total Shares in issue after the Issue and Allotment of Shares pursuant to the Offer
Maximum Aggregate Subscription 235,000,000 Minimum Aggregate Subscription 205,000,000
Market Capitalisation of the Company at Offer Price: Maximum Subscription US$117,500,000 Minimum Subscription US$102,500,000
Additional shares to be issued at IPO on HKEx*:
Number of New Shares at IPO 100,000,000 Projected Offer Price per Share at IPO HK$35.00 Targeted Capital Raising at IPO HK$3, 500,000 (US$500 million)
*Application will be made within 3 months of the date of the Offer to the Hong Kong Stock Exchange (HKEx) for the Shares issuedpursuant to the Offer, as well as all other issued Shares in the Company, to be granted Official Quotation by the HKEx. The fact that theHKEx may Admit the Company to its Official List is not to be taken in any way as an indication of the merits of the Company or of theShares now offered for subscription. Quotation, if granted, of the Shares offered by the Offer will commence as soon as practicable after thelodging of relevant statements to HKEx Listings Committee. The HKEx takes no responsibility for the contents of the Offer including theexperts‟ reports which it contains.
Company Overview & Summary
LontohCoal is a mining and development company with a portfolio of anthracite,coking and thermal coal assets in South Africa and Zimbabwe, comprising:
100% interest in an anthracite coal mine in Piet Retief with current production of 50ktpm with mineable reserves and resources of 20 million tons,
100% interest in an anthracite deposit in Vryheid with proven reserves of 33 million tons,
100% interest in a thermal coal deposit at Lephalale (Waterberg coalfield) with 648 million tons, and
51% interest in high quality coking and thermal coal deposit at Lubimbi coalfield in Zimbabwe with 400 million tons proven reserves and 977 million tons inferred resource (open cast) and a further 6.249 billion tons inferred resource (underground).
First revenue expected Q1-2011 from Kwasa Anthracite Colliery in Piet Retief, with estimated monthly EBIDTA of ZAR25 million by Q2-2011;
Access to strategic infrastructure for coal mining and exports, managed by
wholly owned subsidiary; Lontoh Logistics (Pty) Ltd.:
Rail (negotiations in advanced stages for dedicated toll on NRZ & CFM rail networks)
Road
Port (negotiations in advanced stages to acquire a significant equity interest in a Port Concessionaire in Maputo)
Water
Power
Negotiations with potential domestic and overseas off‐take partners
ongoing;
IPO on the Hong Kong Stock Exchange planned for Q2-2011 and Q3-2011,
followed by secondary listing on JSE Securities Exchange in Q3-2011.
Company Overview & Summary
Board of Directors
• A qualified electrical engineer with over thirty years experience ascompany director and board chairman in diverse industries such asmining, electronics, heavy industries and commodity trading.
Elisante E. Muro
(Chairman, non-executive)
• An investment banking professional with 15 years experience ascompany director. Has extensive expertise in business development,project finance, business start-ups and commodity trading. In the lasteight years he initiated, developed and raised capital for mining andexploration projects across the platinum, gold, coal and iron oresectors.
Tshepo Kgadima
(President & CEO)
• A qualified mining engineer with 20 years experience across mineralsectors, i.e. coal, diamonds, gold, manganese and iron ore. Hasextensive experience in mine development, shaft sinking, opencastand underground mining as well as mineral processing.
Phillip T. Xaba
(Vice President: Operations)
• An experienced director of non-profit organisations and commercialcompanies in East Africa, West Africa and South Africa, with particularexpertise in corporate governance.
Samuel O. Misiani
(Independent non-executive)
Mining & Exploration Portfolio
South Africa Zimbabwe
Hlobane View Colliery, Vryheid
Total Resource – 66 MtMineable Reserves – 33 Mt
Lubimbi Coking & Thermal Coal Project
400Mt – Proven Reserves, Opencast977Mt – Inferred Resource, Opencast
6.249bn tonnes - Inferred Resource , Underground
51%100% Lephalale Thermal Coal Project
648Mt Inferred Resource
LontohCoal Limited
100%
Kwasa Anthracite Colliery, Piet Retief
4.8Mt Mineable Reserves 16.9Mt Indicated
Resource
100%
Resources & Reserves (SAMREC compliant)
Project name Locality Coalfield ResourceCategory (SAMREC)
ResourceCategory(SAMREC)
ResourceCategory(SAMREC)
Lubimbi Coking & Thermal Coal Project
Zimbabwe Lubimbi Inferred Indicated Measured
Opencast 977 MT 400 MT
Underground 6 249 MT
Lephalale Thermal Project
South Africa Waterberg 648 MT
Kwasa Anthracite Colliery, Piet Retief
South Africa Kwa-Zulu Natal
16.9 MT 4.8 MT
Hlobane View Colliery, Vryheid
South Africa Kwa-ZuluNatal
33 MT
Total 7 894 MT 437.8 MT
Share Capital Structure
LontohCoalLimited
Founders & Management
Vendors Pre-IPO Investors
Broad-Based Black Economic
Empowerment Investors
35% 24% 30% 11%
Share capital structure:(Post Capital Raising, Pre-IPO)
Authorised Share Capital – 500 million shares
Issued Share Capital – 235 million shares
South Africa
Hlobane View Colliery, Stockpile, RBCT Rail Line, Front Portal and Dundas Seam
2.2 meters
Hlobane View Colliery
Situated in Vryheid, KwaZulu-Natal;
Measuring 900 hectares in extent;
New Order Mining Right pending;
Coking coal: Total resource of 6.3 Mt and 3.3 Mt of Immediately Available
Reserves (“IAR”);
Anthracite coal: 54 Mt indicated resource and 30 Mt of IAR:
1st production targeted for May 2011
1.2 Mt per annum production estimated from 2012 to 2015
1.8 Mt per annum estimated for 5 years thereafter
Vryheid Geology and Coal Quality
Geology:The Vryheid Coalfield forms part of three major coalfields found in Kwa-Zulu Natal, and one of 19 coalfieldsfound in the Karoo Sequence of South Africa.
The Vryheid Coalfield covers an area of approximately 2,500 km2 of which approximately 15% is underlain bycoal seams (Bell and Spurr, 1996). The stratigraphy of the Vryheid coalfield is composed of the basal DwykaGroup (glaciogenic sediments) which is, in turn, succeeded by sediments of the Ecca and Beaufort Groups.
The seams within the Vryheid Coalfield are developed within a coal zone found in the Vryheid formation of theEcca Group. The following seams occur within the Coal zone: the Fritz seam, Alfred seam, Gus seam, Dundasseam, and Coking seam, all of which have been examined carefully through the various phases of explorationon site, the Company has since determined that the Fritz and Dundas seams are too narrow for commercialexploitation.
Coal Quality:In the Vryheid Coalfield of KwaZulu-Natal, the Coking Seam is high-grade bright coal with excellent cokingproperties at medium rank and commonly contains very low ash of between seven and eight per cent (Bell andSpurr11). The Lower Dundas Seam is mined as coking or steam coal in the Vryheid Coalfield (Bell andSpurr11). Good quality coke has been produced from the Gus Seam in the Vryheid Coalfield where it isunaffected by dolerite intrusions and high quality anthracite where the seam has been metamorphosed (Belland Spur11). The Alfred Seam (Vryheid Coalfield) is of low grade with average CV of 26–27 MJ/kg, ash contentof 16–35% and poor coking properties. The Fritz Seam is generally of fairly high grade but high sulphur content(Bell and Spurr11) and is usually mined together with other seams in opencast operations.
Hlobane View CollieryTechnical Summary, Mineable Reserves & Mining Method
Hlobane View Colliery is located 11 km East of the town of Vryheid in KwaZulu-Natal
The mineable reserve tons by seam:
Alfred seam – 16.4Mt
Upper Dundas seam – 10.3Mt
Lower Dundas seam – 28Mt
Coking seam – 6.3Mt
The primary sales production is earmarked for the export market
Target Production of 100ktpm by Oct‟ 2011
Mining Method: Mechanised Bord and Pillar
Z-Seam: Coal cutters, gathering arm loaders, shuttle cars (avgheight of 3 m)
L & U Dundas: Coal cutters and battery scoops (avg height of 2.1 m)
Plant design
40 mm top-size (cyclone only)
Middlings fraction required
2-stage Processing Plant with 200 ton/hour RoM tons capacity
Processing Plant to be commissioned by May 2011
Alfred Seam Qualities, (sized & washed)
Sizing 40 x18 mm 18 x 6 mm 6 x 0 mm
I.M.% 2.0 2.0 2.0
Ash% 14.0 14.0 14.8
V.M.% 7.5 7.5 7.5
F.C.% 76.5 76.5 76.5
Sulphur % 0.70 0.70 0.70
C.V. MJ/kg 29.55 29.55 29.15
P in Coal% 0.073 0.073 0.073
Lower & Upper Dundas Seam Qualities, (sized & washed)
Sizing 40 x18 mm 18 x 6 mm 6 x 0 mm
I.M.% 2.8 2.8 2.8
Ash% 11.0 11.0 11.0
V.M.% 6.0 6.0 6.0
F.C.% 80.2 80.2 80.2
Sulphur % 1.15 1.15 1.15
C.V. MJ/kg 30.75 30.75 30.75
P in Coal% 0.010 0.010 0.010
General Stratigraphy of Kwa-Zulu Natal Coal Seam
Code Annotation Lithology Thickness(m)
DO Dolerite
SD Sandstone
GS Guss Seam 0.3
SD Sandstone 12
SH-SD Shale/Sandstone
UD Upper Dundas Seam 1
SD-SH Sandstone/Shale 6
LD Lower Dundas 2-3.5
SD Sandstone Medium grained 25
CS/ALF Coking Seam 1.2
SD Floating Sandstone
Kwasa Anthracite Colliery, (Front Portal, Addits, Alfred Seam & ROM)
Kwasa Anthracite Colliery
Located 30 km North East of Piet Retief, Mpumalanga;
Formation of Coal is associated with Graben structure due to rifting and
down warping;
Anthracite formed as a result of regional heat and pressure associated with
rifting;
Alfred , Dundas and Guss are Economically Mineable Seams;
Mining is within remainder of Goedehoop 16HT divided into West and East
block by dolerite sill.
Seam Year Jan Feb Mar April May June July Aug Sept Oct Nov Dec Total
Alfred (Tons) 2010 0 0 0 0 0 0 0 0 40,000 40,000 40,000 30,000 150,000
Dundas (Tons) 0 0 0 0 0 0 0 0 0 0 0 0 0
Total 0 0 0 0 0 0 0 40,000 40,000 4,000 30,000 150,000
Alfred (Tons) 2011 30,000 30,000 30,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 45,000 30,000 480,000
Dundas (Tons) 0 30,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 40,000 520,000
Total 30,000 60,000 80,000 95,000 95,000 95,000 95,000 95,000 95,000 95,000 95,000 70,000 1,000,000
Alfred (Tons) 2012 30,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 580,000
Dundas (Tons) 40,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 55,000 645,000
Total 70,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 105,000 1,225,000
Alfred (Tons) 2013 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 720,000
Dundas (Tons) 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 720,000
Total 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 120,000 1,440,000
Alfred (Tons) 2014 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 720,000
Dundas (Tons) 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000 960,000
Total 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 140,000 1,680,000
Kwasa Anthracite Colliery, Piet RetiefProduction Schedule
Zimbabwe
Lubimbi Coking & Thermal Coal Project,(Exploration Drilling, Drill Cores, Outcrop & Railway Siding)
Lubimbi Coking and Thermal Coal Project
High quality thermal and coking coal property measuring 16,545 hectares in
extent;
Newly issued 3-year Special Grant (SG4977) for coal and coal-bed methane
(CBM) exploration;
Phase 1 of exploration drilling completed in August 2010;
Resources (SAMREC/JORC compliant):
400 million tons of measured reserves, opencast, on Block 5 of the concession,
measuring 850 hectares
977 million tons of inferred resource, opencast,
6.249 billion tons of inferred resource, underground
Lubimbi Coking & Thermal Coal ProjectInferred and Measured Resources (SAMREC compliant)
The Lubimbi Coal and Gas deposit is located 20 km NE of Gwai River hotel on Lubimbi road in an easily accessible area served by national road, rail and electricity network.
Rail:
The railway from Hwange to Bulawayo passes through the western part of the Lubimbi coal and gas deposit.
Roads:
The tarred national road from Bulawayo to Victoria Falls passes across the southern part of the Lubimbi coal & gas deposit.
Electricity:
The 330kV power line to the Midlands passes through the Lubimbi coal & gas deposit as well as 33kV power lines ensuring availability of electricity when required.
Water:
A water will be sourced from the Shangani River as well as from underground.
Coking (20%) and Thermal (80%) Resources for Lubimbi
Resource Block PayzoneThickness (m)
Area (m2) Payzone Reserves
Block I (inferred) 15.66 805,900 18,930,591
Block II (inferred) 26.74 2,562,453 102,779,990
Block III (inferred) 20.42 14,455,396 442,768,780
Block IV (inferred) 26.71 10,290,158 412,275,180
Block V (measured) 28.95 8,544,324 400,00,000
Underground (inferred) 34.62 120,323,213 6,249,000,000
Total 25.51 156,981,444 7,494,000,000
Lubimbi Average Coal Qualities, (based on washed samples)
Specific Gravity
CV (Mj/kg) Moisture (%)
Ash(%)
Volatiles (%)
P (%) S (%)
Washing at 1.4
29.4-32.5 3.0-8.0 9.6-15 24.6-28.0 0.015-0.05 0.08-1.17
Locality Map
Geological Map
Google map of Lubimbi Project
Lubimbi Project Location
Schematic Columnar Sections & LithostratigraphicCorrelation of Zimbabwe Coalfields
Geotechnical Consultants
SNC Lavalin Group - Scoping & Feasibility Study (to be completed by end of March 2011)
Mine Power Plant (250MW)
Coke Batteries
Coal-to-Liquids (CTL), 25,000 Barrels per Day Plant
Rail Siding, Rail Network & Rolling Stock
Port Access & Infrastructure
Ox Drilling – Exploration drilling (phase 1 completed on 30 August 2010)
Coffey Mining – Competent Persons Report (to be completed by end of March 2011)
Clearcut Diamonds Operations
Mining Contractor for Lubimbi Colliery (mining development to start end of March 2011)
Coal Washing Plants at Kwasa Anthracite Colliery and Lubimbi Colliery (commissioning: June 2011)
Professional Consultants
Transaction Overview
Funding Requirements
LontohCoal‟s strategy is two-fold:
Organic growth through theactive development of itsprime properties; and
Growth via consolidation ofkey properties.
In the order of priority,LontohCoal‟s immediateobjectives are as follows:
Raise Capex and Opex forKwasa Colliery
Begin the development ofLubimbi Coal & Gas Project.
LontohCoal is looking for theright strategic/financialpartners to assist thecompany in achievingimplementing theabovementioned strategy.
1
LontohCoal
Status
• Anthracite Coal• Underground Mining• Reserves: 5Mt• Resources: 16Mt• LoM: 15 years• Production Target:
100ktpm by Q4, 2010,
• Acquired 100% for cash and shares
• Capex & Opex estimated at ZAR110 Mil
Kwasa Anthracite Colliery
• Coking & Thermal Coal
• Open pit & Underground
• Production Target: 5Mtpa by 2012
• LoM: 30 years• Drilling Completed
Lubimbi C & T Project
Exploration Targets
• Lephalale 221LQ(>648 Mt in situ thermal/ coking in the Waterberg, 10km north of GrootegelukMine of Exarro)
PHASE 1 PHASE 2
Description
• Pre-Feasibility completed
• US$39 M required to develop mine to producing stage
• Construction period and Ramp up: 12 months
• Consolidation
South AfricaProposed Transaction Structure
Transaction StructureObjective To create a strong SA coal
junior producer with assetsthroughout Southern Africa
To leverage potentialsynergies and become aconsolidator via acquisitions
Use of Proceeds To raise up to ZAR110 million
for phase 1 and 2
• Phase 1
Fund ZAR98 million Capex &Opex at Kwasa AnthraciteColliery to achieve 105ktpmROM Production by May2011
• Phase 2
ZAR5 million for furtherexploration drilling at KwasaAnthracite Colliery
ZAR7 million for explorationdrilling at Lephalale Thermalproject
1
Equity Capital raised through LontohCoal
Kwasa Anthracite Colliery and Lephalale Project
Offtake Agreements & Operational Cash flows
• LontohCoal requires ZAR110 Million for Phases 1 and 2 and is looking forboth financial and strategic partners
• For strategic partners, LontohCoal is willing to consider entering into off-take arrangements at Hlobane View Colliery and other assets
• Given LontohCoal‟s mission to be a black-controlled company and theassociated benefits from a South African perspective, the existingshareholders of LontohCoal will need to hold a minimum of 26% of theequity and voting rights of the company
ZimbabweProposed Transaction Summary
Transaction StructureObjective To create a sub-Saharan
Africa coking and thermal coal mining champion focused on Zimbabwe‟s premier coalfields
Use of Proceeds US$2.5 million for phase 1
and an additional $36 millionfor phase 2.
Phase 1
$2.5 million in has beenspent for exploration drilling& pre-feasibility
Phase 2
$36 million to take Lubimbimine development withtargeted production of300ktpm in Q3 of 2011
1
Zim & RSA Vendors & Founders
LontohCoal
New Investor(s)>51%
LontohCoal requires $39 million for Phases 2
Under Phase I, LontohCoal will spend US$2.5M from new investor(s) andsimultaneously exercise its options over Lubimbi property for acombination of cash and equity interest in LontohCoal on a post moneybasis
In Phase II (which occurs immediately after phase I), the remainingUS$36 is injected by the new investor(s) into LontohCoal and the othershareholders dilute on a pro rata basis
For strategic partners, LontohCoal is willing to consider entering into off-take arrangements
Use of Proceeds Expansion & Development Program
KWASA ANTHRACITE COLLIERY ZAR US$
Processing Plant R 60,000,000 $8,000,000
Power Supply (1 MVA) R 13,000,000 $1,733,333
Road Repair and Upgrade R 8,000,000 $1,066,667
Water Supply and Reticulation R 5,000,000 $666,667
Earthworks and Civils R 12,000,000 $1,600,000
Sub Total R 98,000,000 $13,066,667
LUBIMBI COKING & THERMALPROJECT
Earthworks and Civils R 4,000,000 $533,333
Surface Layout and Infrastructure R 10,000,000 $1,333,333
Pollution Control and Slurry Dams R 15,000,000 $2,000,000
Road Repair and Upgrade R 15,000,000 $2,000,000
Power Supply (6 MVA) R 25,000,000 $3,333,333
Water Supply and Reticulation R 20,000,000 $2,666,667
Processing Plant and Laboratory R 90,000,000 $12,000,000
Cables and Sub-Stations R 5,000,000 $666,667
Weighbridge and Accessories R 10,000,000 $1,333,333
Dete Railway Siding Upgrade R 40,000,000 $5,333,333
Conveyor Belts R 35,000,000 $4,666,667
Sub Total R 269,000,000 $35,866,667
GEOTECHNICAL CONSULTANTS ZAR US$
Ox Drilling Exploration R 5,250,000 $700,000
Hwange Laboratory R 420,000 $56,000
Noko Laboratory R 950,000 $126,667
Coffey Mining R 3,000,000 $400,000
Total Station Survey R 900,000 $120,000
Environmental Management Report R 900,000 $120,000
Mining Lease Application R 375,000 $50,000
SNC-Lavalin R 3,000,000 $400,000
Promet MEI Engineers R 2,000,000 $266,667
Barberry Group R 2,000,000 $266,667
Sub-Total R 18,795,000 $2,506,000
GRAND TOTAL R 385,795,000 $51,439,334
Anthracite Coal Coking Coal Thermal Coal
Resources (inferred and indicated) 66 million tons 1.4 billion tons 5.7 billion tons
Reserves (measured and proven) 20 million tons 80 million tons 320 million tons
ROM Production per year 1 million tons 2 million tons 4 million tons
Geological Loss @ 10% 100,000 tons 200, 000 tons 400,000 tons
Recovery @ 90% 900,000 tons 1.8 million tons 3,6 million tons
Saleable Tons after Processing @ 75% yield for Anthracite, Coking and 80% yield for Thermal 675,000 tons 1,350, 000 tons 3, 200, 000 tons
Mine Cost per Saleable Ton ZAR200.00 ZAR167.00 ZAR140.00
Processing Cost per Saleable Ton ZAR38.50 ZAR44.50 ZAR38.00
Logistics per Ton (Road, Loading, Rail, & Port) ZAR286.00 ZAR519.00 ZAR245.00
Total FOB Cost per Saleable Ton ZAR524.50 ZAR730.50 ZAR433.00
Projected FOB Sale Price per Ton ZAR862.50 ZAR1,275.00 ZAR525.00
Operating Margin per Ton ZAR338.00 ZAR544.50 ZAR92.00
Economic Highlights
Key Assumptions
Rand Dollar Exchange: USD:ZAR 7.00
Long-Term Average Price of Anthracite: USD 130/ton
Long-Term Average Price of Coking Coal: USD 190/ton
Long-Term Average Price of Thermal Coal: USD 75/ton
Matola Coal Terminal in Mozambique is preferred port of
access for coal exports from both Piet Retief & Lubimbi
Thermal Coal will be supplied to the proposed Lubimbi
Power Plant
Investment Highlights
Results:
Current
D/(D+E) 0.00%
Equity Beta 104.00%
Cost of Equity 15.32%
After Tax Debt Interest 0.00%
WACC 15.32%
Recommended Debt: 0.00%
Return Analysis
Valuation Date January-2011
Discount Rate NPV Rate
Under Agreement
[R'000] 1,632,775 15.3%
Post Agreement [R'000] - 15.3%
Total ['R'000] 1,632,775
IRR Post tax Pre- Tax
Under Agreement [%] 129.5% 117.5%
For All Periods [%] 129.5% 117.5%
Other Inputs
Annualised Inflation 5.00%
Cost Escalation 5.00%
Dollar Exchange rate 7.00
Tax Rate 28.00%
Investment Highlights
-
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
$'000Cash Waterfall
Distributions to Equity
Tax Paid
Deposits to DSRA (Operations)
Senior Debt Interest (excl. CPIs)
Senior Debt Principal (excl. CPIs)
Mining, Process & Transport
Other Expenses
Investment Highlights
(1,000,000)
(500,000)
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
20
26
20
28
20
30
R'000Equity Returns
Tax Payments
Pre-tax Cash Flow
Profit after Tax
Cash Flow after Tax
Tax Losses Carried Forward
Proposed Coal Terminal at Maputo, Mozambique(LontohCoal in advanced negotiations to acquire significant equity interest in concessionaire company)
Contact Information
Tshepo KgadimaPresident & CEO
LontohCoal Limited28 Impala RoadBongani HouseChislehurstonSandton, 2146Republic of South Africa
Tel: +27 10 590 0671
Mobile: +27 82 965-7131 Fax: +27 86 567 2149E-mail: [email protected]
Top Related