The shares were listed to raise development funding for the company’s wholly owned subsidiary, Minergy Coal who owns the Masama coal resource, located in the south-western corner of Botswana’s Mmamabula coalfield.
Minergy plans to build an opencast coal mine with the potential to produce 2.4 Mtpa within 16 to 18 months of the BSE listing.
[quote]The company will focus on delivering high quality coal to the regional market, including Botswana and South Africa, and possibly the export market.
Minergy CEO, Andre Boje, accompanied by Minergy chairman Mokwena Morulane, CFO Morné du Plessis and members of the board of directors and executive management to the listing function, marked the occasion as “a great day for Minergy marking the beginning of resurgence in the Botswana coal industry.”
Minergy will be the second producer in the country.
Furthermore, Boje says that, “together with government and other industry players, Minergy will look to address the logistical challenges facing the coal industry in Botswana.”
“We are pleased to be listing on the BSE, we are in good company and as a responsible corporate citizen, and we are committed to skills development and training and giving back to the communities in which we operate.”
The company has further plans to list on the JSE in the latter half of 2017 or early 2018.
In the initial capital raising, BWP 72 million was raised by means of private placement. The total investment needed to develop the 347 Mt high-quality coal resource covering 120 km2 will be in the region of BWP 200 million.
Boje says an investment in the company offers shareholders an opportunity to invest in an anticipated cash generative coal mining operation which presents a platform for further growth and creation of shareholder value.
“Assessments of the Masama coal project completed to date indicate that it will be capable of generating commercially attractive returns which would enable the company to pay attractive dividends.”
Boje says coal will continue to play a major role in delivering energy access and security for a long time to come.
“The International Energy Agency forecasts that coal will remain the largest single source of electricity generation until 2040. Coal still makes up 41% of global electricity generation and 29% of primary energy demand,” he says.
Against this background, and given the fact that the Masama coal reserve can be mined at low cost and low risk, it offers investors the potential of attractive returns and future expansion opportunities in foreign based earnings.
Minergy's low cost competitive advantage lies in its shallow coal seams which allow extraction through opencast methods at low strip ratios which will more than make up for any potential logistics disadvantages.
Featured image credit: Minergy
(Minergy CEO, Andre Boje)