As part of its sustainable growth approach, Exxaro conducted an internal portfolio review to evaluate and optimise its current coal operations and projects. Exxaro identified assets which are non-core to its future strategic objectives and decided to dispose of its total equity interest in Exxaro Coal Central Proprietary Limited (“ECC”) and its Leeuwpan Coal Mine operation (“Target Assets”).
Exxaro resultantly embarked on a divestment process of the Target Assets.
In determining the acquirer of the Target Assets, Exxaro applied selection criteria including value maximisation, broad based black ownership and sustainability of the new operator to operate the Target Assets, whilst also minimising transaction execution risk for Exxaro.
The divestment process has now culminated in an agreement for the disposal of ECC. Exxaro has signed a definitive sale and purchase agreement (“SPA”) with Overlooked Colliery Proprietary Limited (“Overlooked”).
Overlooked will acquire all of the issued shares in, and shareholder claims against, ECC (“ECC Transaction”). Exxaro has obtained certainty of funding from Overlooked’s lenders towards settlement of its obligations in terms of the ECC Transaction.
The Leeuwpan Coal Mine operation’s disposal is ongoing, and the public will be updated on progress once finalised.
ECC comprises the Dorstfontein, Forzando and Tumelo operations. The Dorstfontein complex is located north-east of the town of Kriel, in South Africa’s Mpumalanga province and comprises Dorstfontein West (“DCMW”), an underground mine, and Dorstfontein East (“DCME”), an opencast and planned underground operation. DCMW and DCME’s mining rights expire in December and October 2036 respectively.
The Forzando complex lies South East of the Dorstfontein complex and comprises two underground mines, Forzando North (“FZON”) and Forzando South with both mining rights expiring in November 2027. Forzando accessed some historical workings at FZON (under care and maintenance since 2014) successfully in the 2018 financial reporting year resulting in increased product mix production and quality.
Tumelo, a company owned by ECC and Mmakau Mining Proprietary Limited, with mining rights expiring in 2025, was recommissioned and commenced operations in Q2 2019 following technical and financial evaluations.
ECC’s successful sale to a black-owned mining operator with a strong track record such as Overlooked, has confirmed Exxaro’ s strategic view that the assets have value and that a different operator is better placed to extract maximum value from these assets.