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November 2015
MODERN MINING
25
COAL
Charging up drilled inter-
burden block beneath the
4-Seam in the VG4 pit.
processing being channelled through existing
capacity at Vanggatfontein.
“Moabsvelden remains at the top of our
project pipeline but it is not going to be devel-
oped according to the original timeline we had
in mind, which envisaged first production by
the end of this year,” comments Glad. “Firstly,
although we have a mining right in place we do
not yet have an Integrated Water Use Licence
(IWUL) and it is no longer possible – as it used
to be – to start mining without one. We have
been told that the issue of the licence is immi-
nent but this could mean anything from days
to months.
“Secondly, we can’t proceed until we have
an offtake agreement with Eskom. The problem
here is that Eskom is now asking its suppliers of
coal to have a 50 % plus 1 share empowerment
structure in place. Keaton as a company is fully
empowered in terms of the Mining Charter with
a 26 % holding by BEE groups at present. We’re
in the process of ‘flipping’ our empowerment
from the asset level to the holding company
and this – together with some other shareholder
changes – should see Keaton Energy Holdings
emerging shortly as probably a 30 % empow-
ered company.
“We believe in empowerment and have every
intention of moving up to the 50 % + 1 level but
it’s not going to happen overnight,” she con-
tinues. “Our share price currently trades at a
significant discount to our net asset value, so
how do we do a deal? We’re looking at various
strategies to get us to where we want to be but,
as I say, it’s going to be difficult to achieve in the
present market so Moabsvelden is, at the very
least, a year or two away. We said in our 2015
annual report that we would target first product
by the third quarter of calendar 2016. We may
still meet this target but there are certainly no
guarantees. With Vanggatfontein working well,
we’re under no real pressure with Moabsvelden
and we can afford to delay its development.”
Glad is in no doubt, however, that Moab
svelden is an outstanding project. “We’ve
always said it is a good project and we maintain
this view. It has about 80 % of the resources of
Vanggatfontein and once it is in operation – at a
projected rate of about 2,5 or 2,6 Mt/a (ROM) –
it will turn our Delmas complex into a roughly
6 Mt/a (ROM), 4 Mt/a (saleable) producer.
Given that it will use Vanggatfontein’s infra-
structure, the capex is relatively low at around
R300 million. The main new works we will
have to undertake are an expansion of washing
capacity at Vanggatfontein by about 300 t/h and
the construction of a dedicated 5 km long haul
road to link the properties.”
After Moabsvelden, the next most likely
project for Keaton to develop is Braakfontein,
located 10 km south-east of Newcastle in KZN,
which would produce mainly an A-grade coal
for export from both opencast and under-
ground operations. Says Glad: “Although we’re
currently updating our feasibility study on
Braakfontein, I can’t see it being developed in
the current market. It simply wouldn’t be via-
ble at current international coal prices. It also
requires a significant capex of R600 million,
which is quite formidable for a company of
Keaton’s size. I have no doubt it will be devel-
oped in time but I think it is still some way off.”
Turning to the Vaalkrantz mine, Keaton’s
only other producing asset apart from
Vanggatfontein, Glad says a new management
team is in place at the colliery and that the
“With Vanggat
fontein working
well, we’re
under no real
pressure with
Moabsvelden
and we can
afford to delay its
development.”