WESCOAL SETS THE PACE FOR CONSOLIDATION IN JUNIOR COAL-MINING SPACE

August 25, 2017

Wescoal’s acquisition of Keaton Energy in July has placed the coal-mining and distribution group squarely on track to lift its annual production from under 4mtpa to 8mtpa ROM in the short to medium term and the Trading division is in line with business expectations according to CEO Waheed Sulaiman.


A Wescoal Holdings Limited market update released on the JSE this week highlights the activities of the group which has moved on its intentions to play a role as a consolidator in the junior coal mining sector. Sulaiman says Wescoal is prioritising a successful integration to unlock value from the Keaton business.


“The Group restructure and redeployment process is also in line with the regulatory framework and key technical and mining skills have been successfully retained. However, Keaton and its associated brand will, for the immediate future, continue to be used and exist as a wholly-owned subsidiary of Wescoal


“Inorganic growth initiatives will still be focussed on acquiring additional resources and strategic interests in key coal related infrastructure where there are value enhancing growth opportunities,” he points out.


Sulaiman says transformation is at the centre of the company’s employment and ownership principles. "In keeping with the company’s 51% minimum black ownership, it’s enlarged shareholder base is now around 51.68% and once there are further shareholdings identified, but not yet verified, this figure could be as high as 58.09%. In addition, a broad-based ownership scheme involving employees is planned for implementation which is likely to further enhance BEE ownership.


”Our strategic priorities remain to maximise value from existing assets in a safe and responsible manner, to sustainably grow the business, and to deliver solid and predictable operational and financial performances. We will continue to plan and execute projects in a considered, risk-based manner to manage and realise value from its growth plans.’


He points to the recent appointment of Izak van der Walt as Chief Financial Officer. “He brings a wealth of experience to the post including having been acting CFO for the group for nearly a year and a long, successful history in the industry. Also in keeping with our considerable growth, the financial department is being strengthened with the addition of top-rated professionals.


Sulaiman concludes by inviting potential investors to visit the newly acquired and existing operations in the Delmas and Middleburg areas. “We continue to engage with stakeholders in a constructive and positive manner and those interested in visiting our facilities should contact the company’s IR advisors who are arranging this in the next few months- IR@singular.co.za


Wescoal Holdings Limited mines, processes, supplies, sells and distributes coal. It is listed on the main board of the JSE and its key strategic thrust is to be a leading junior coal miner with a sustainable resource base and a coal trading operation

Captions: Wescoal CEO Waheed Sulaiman – focussing on growth and value

Wescoal CFO Izak van der Walt – a wealth of experience Keaton’s flagship mine Vanggatfontein
Wescoal processing plant




SENS announcement


Wescoal Voluntary Strategic Update – 23 August 2017 Wescoal is pleased to provide a positive update to shareholders on various strategic company matters including the integration of Keaton Energy (“Keaton”), BEE ownership and other matters pertaining to the combined enlarged organisation.


KEH Integration


The Keaton acquisition was effective from 4th July 2017 and integration activities are progressing well.

  • Cost savings intended to be achieved through synergies and optimisation of management and systems are on track. A number of specific procurement related cost saving initiatives have been identified and are being implemented immediately. From March 2018, the former Keaton head office building and rental costs will also be discontinued, resulting in further savings.
  • The Group restructure and redeployment process is on track and in line with the regulatory framework. Key technical and mining skills have been retained successfully.
  • Operational and financial performance from the Keaton business unit have to date been in line with expectations.
  • Keaton and its associated brand will, for the immediate future, continue to be used and exist as a wholly owned subsidiary of Wescoal.
  • The Company intends to consider implementing a holistic information management and reporting tool to be integrated across the enlarged organisation as part of its business optimisation and risk management programs.

Production
  • WSL has previously announced an annual ROM production target of 8 million tons per annum to be achieved in the short to medium term. Production from the combined operations is on track to achieve these targets.

Growth
  • Wescoal remains intent on playing a role as a consolidator in the junior coal sector and will continue to consider value enhancing growth opportunities. Inorganic growth initiatives will be focussed on acquiring additional resources and strategic interests in key coal related infrastructure. The Group’s immediate priority centres around successfully integrating and unlocking value from the recently acquired Keaton business.

BEE Ownership
  • Wescoal’s minimum 51% BEE ownership is a threshold which will be protected and maintained with transformation at the centre of the Company’s employment and ownership principles.
  • In its latest BEE ownership report dated 25 July 2017, the Company’s verified effective economic interest by BEE shareholders in the enlarged shareholder base is at least 51.68%. However, there are further identified but not yet verified shareholdings, which could give the Company a maximum BEE ownership of up to 58.09%. The full BEE Ownership Report is available on the Wescoal company website www.wescoal.co.za
  • Additionally, a broad based ownership scheme involving employees is planned for implementation which is likely to further enhance BEE ownership.

Leadership’s Priorities
  • Wescoal leadership’s strategic priorities remain to maximise value from existing assets in a safe and responsible manner, to sustainably grow the business, and to deliver solid and predictable operational and financial performances. Planning and executing projects in a considered, risk-based manner is how Wescoal will continue to manage and realise value from its growth plans.

Shareholders and Diary Update
  • Wescoal’s interim results will be announced during the first week of November 2017. Various group and individual shareholder engagements will be scheduled nearer to the time.
  • The Company’s Annual General Meeting is scheduled for 14th November at 10:00am wherein the resolutions put to shareholders as per the 2017 Integrated Annual Report (“IAR”) will be addressed and voted on. It is anticipated that the IAR will be sent to shareholders by mid-October 2017.
  • Company management continues to engage with stakeholders in a constructive and positive manner. It is currently assessing investor site visits to newly acquired and pre-existing operations in the Delmas and Middleburg areas in September and/or November. Interested investors should contact the Company’s IR advisors at IR@Singular.co.za


INFORMATION SOURCES:
Website: www.wescoal.com

Investor Relations
Jacques de Bie, Senior Manager, IR
Singular Systems - 082 691 5384
Media inquiries:

Wren Mast-Ingle
Tel: 072 663 3926
Email: info@Mi5.co.za

Issued by Mi5 on behalf of Wescoal Holdings