Minergy lists first locally owned low-cost coal project on BSE | The Tswanatimes | Sello Motseta
Minergy Limited revealed today that expect to start coal mining about 50km from Gaborone in Medie, a small village not far from Botswana’s business district in an effort to exploit coal deposits of a staggering 347 million tones and a mine life of 80 years with a capital injection of P72million.
Mining is projected to begin in July 2018 if relevant regulatory approval is given and 1000 direct jobs are expected to be created as Botswana endeavours to become a coal exporter to regional giant South Africa which like Botswana faces challenges of access to power resources.
“We are first coal focused company to be listed on the main BSE board and later on in the year we want to do another listing on the JSE to be a dual listed company,” said Andre Boje, Chief Executive Officer of Minergy. He said, “There has been a lot of talk about Botswana’s coal deposits but no one has done anything about it. We plan to change that narrative.”
Minergy plans to build an opencast coal mine with the potential to produce 2,4 Mtpa within 16 -18 months of the BSE listing. The company will focus on delivering high quality coal to the regional market, including Botswana and South Africa, and possibly the export market targeting countries like India, China and Europe. A buoyant Boje maintained 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 Botswana Stock Exchange, we are in good company, and as a responsible corporate citizen, 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, BWP72 million was raised by means of private placement.The total investment needed to develop the 347 Mt high-quality coal resource covering 120km2 will be in the region of BWP200 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,” Boje said. 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 method at low strip ratios which will more than make up for any potential logistics disadvantages.
This should present an opportunity to pay attractive dividends once the company is profitable and generates the required free cash flow. It will also enable the company to consider various opportunities for growth in the future. “We expect that all Environmental Impact Assessments, feasibility studies and the approval of our mining license will be in place by the second quarter of 2018, with production commencing in 2018,” Boje says. The listing of Minergy and the development of the Masama Coal Project hold significant benefits for Botswana with management appointing local managers and board members.
Speaking for the Botswana Stock Exchange Market Development Manager Thapelo Moribame maintained that the BSE Strategy for 2017 – 2021 is to increase ratio of the BSE’s market Capitalization to GDP from 34% to 40% by 2021 and increase local companies on BSE from 24 to 30 by 2021. “So far in 2017, we held another successful Conference to groom companies to list and since then we have had 2 corporate bonds listing. This is testimony that the BSE as a viable platform for businesses to raise capital,” said Moribame.
Currently there are thirty-three(33) companies listed on the BSE. Twenty-three (23) of these are listed on the domestic board while ten (10) are on the foreign board. There are also four (4) ETF’s and forty-two (42) bonds listed on the BSE. There are eight (8) mining companies currently listed on the bourse. These had a market capitalization of P355.6 Billion out of the total market cap of P420.4 Billion. The Minergy listing is expected to add an extra P376 Million to the BSE’s market capitalization.