Exxaro sells three coal mining operations to Overlooked Colliery
Exxaro has sold three noncore coal miners to a BBE junior miner.
One of South Africa’s largest black empowered mining companies, Exxaro, has sold its Dorstfontein, Forzando and Tumelo operations – collectively known as Exxaro Coal Central (ECC) – to Overlooked Colliery, a 100 percent black-owned coal mining company.
“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,” Exxaro said.
Exxaro said it applied selection criteria including value maximisation, broad-based black ownership and sustainability of the new operator to operate the assets, while also minimising transaction execution risk for Exxaro in determining who should acquire the assets.
“We are pleased to play a meaningful role in assisting black mining operators in obtaining scale and additional resources to their existing operations,” the group said. Included in the purchase consideration is cash in the rehabilitation trust, which Exxaro will retain, while Overlooked assumes all the rehabilitation liabilities. Exxaro will also retain all coal export entitlement through the Richards Bay Coal Terminal.
Exxaro said it had obtained certainty of funding from Overlooked’s lenders towards settlement of its obligations in terms of the ECC transaction. Exxaro said Overlooked had procured funder confirmation and guarantees from Absa and “another South African bank”.
The transaction, which is expected to close in the second half of 2021, is waiting for approval from the Competition Commission and the department of mineral resources and Energy.
The value of the deal was not disclosed, but the company said proceeds received would be used in accordance with its capital allocation framework.
The transaction’s closure depends on the finalisation of regulatory approvals and other conditions, which Exxaro said were customary in a transaction of this nature.