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South Africa: Miranda Shares Soar After Coal Plans Exposition
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Business Day (Johannesburg)
19 May 2008
Posted to the web 19 May 2008
Charlotte Mathews
Johannesburg
THE share price of minerals explorer Miranda Mineral Holdings (MMH) soared to a high of 260c on Friday after it hosted an unusually warm reception for investment managers at its KwaZulu-Natal coal projects on Thursday.
Police halted traffic on the road from Newcastle Airport to make way for the bus carrying about 30 surprised analysts to the Century Casino for the presentation, which began with a welcoming letter from African National Congress president Jacob Zuma, read by his son Duduzani.
Zuma himself had another appointment and could not attend.
The area around Newcastle in KwaZulu-Natal is economically depressed. Many coal mines closed in the previous decade as coal prices slumped, a trend that has reversed only in the past three years. In 1982, KwaZulu-Natal coal production peaked at more than 20-million tons a year but by 2006 it had dropped to about 2,5-million tons.
MMH is exploring a number of coal properties around Newcastle and hopes its first joint venture mine, Sesikhona, will be operating by the end of this year if it secures a mining licence by November.
MMH is not a big employer in the area and CEO Ron Nel said he could not estimate at this stage how many jobs it might create.
He ascribed the support of local authorities to the fact MMH had consulted extensively with communities in the area at every stage. In its various projects, community trusts hold a 12% stake or more and will share in profit.
MMH has a portfolio of potential coal, gold and diamond projects as well as some other minerals properties which it considers to be noncore. Dennis Tucker of advisers Qinisele Resources told the presentation MMH could advance the diamond properties in Botswana by raising funds in Gaborone, and the gold properties in Mozambique, showing interesting potential, would be explored further.
MMH's primary focus was to define the value in its coal properties, which it hopes would cause a rerating of the share price. The latest strengthening in the shares puts a value of R3/ton on its 188,8-million tons of resources, considerably below the value put on the resources of other coal companies such as Keaton Energy, Wescoal or Petmin.
In KwaZulu-Natal, MMH is exploring three contiguous properties, further south of Sesikhona, which could be mined partly from one open pit and partly through an underground operation. Mining could start on the three properties, Burnside, Uithoek and Boschoek/Boschkloof, by the second half of next year.
All three properties contain both anthracite, the highest quality of coal, and coking coal, used by the metallurgical industry.
MMH geologist Peet Meyer said the tonnages discovered so far were satisfactory. However, more information was needed on the quality.
Tucker said a rough estimate was that MMH would need about R200m to R250m to develop these properties, including costs of refurbishing its three railway sidings. The exact sum would emerge from the feasibility studies.
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MMH was likely to raise one larger amount at first, followed by smaller sums as needed.
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