Charlotte Mathews
28 October 2008
Johannesburg — AUSTRALIAN-listed Firestone Energy, which has entered into a joint venture in SA to exploit coal prospects in the Waterberg, is to take a secondary listing on the JSE on Thursday.
Firestone was trading at A$0,02 yesterday on the Australian exchange, equivalent to 13,6c a share in South African currency, and slightly below its pro-forma net asset value of 13,92c a share. The company will not raise any new funds on listing.
JSE-listed coal companies have not escaped negative sentiment across equity markets, despite an expected surge in demand for coal from energy utility Eskom. Since rolling power outages last summer, revealing SA's acute power shortage, Eskom has announced plans to bring old power stations back into service and build new ones.
Exxaro Resources, biggest coal group in the sector, had shed 47% to R53,50 over the 12 months to last Friday. Petmin was also 47% lower at 185c but Coal of Africa, at 660c a share, has limited its 12-month loss to 21%.
Firestone said yesterday it was taking a JSE listing to provide a mechanism to pay for acquisitions, offer an additional market from which funds could be raised for South African and African projects, and to facilitate new black empowerment transactions.
Firestone's joint venture is with black empowerment group Sekoko Coal on two properties in the Waterberg. The Waterberg coalfields is SA's biggest untapped gold resource but the area is poorly served by infrastructure.
Firestone said the two properties could contain about 500-million tons of near-surface coal. Firestone's local subsidiary would conduct a bankable feasibility study. Its stake in the projects would rise from an initial 30% by increments of 5% for every R10m spent on exploration to a maximum stake of 55%. The plan is also to establish an independent power producer using the coal from the Waterberg properties.
Once all conditions to the agreement are met, Sekoko can appoint two directors to the Firestone Energy board, and Firestone will pay Sekoko R12,5m in cash and issue Sekoko 220-million of its shares at A$0,04 each after the JSE listing, worth R60m, with an option to get 110-million shares more, at A$0,06 each, before May 2013.
Firestone said in its report for the year to June it was exploring other coal opportunities in SA, but after establishing its joint venture with Sekoko its preference would be deposits in the Waterberg. It would no longer pursue the acquisition opportunities it was examining in the Highveld, Witbank and Ermelo coalfields in Mpumalanga.
Apart from its interests in SA, Firestone is exploring copper-gold deposits north of Alice Springs in Australia.
In the past financial year, Firestone had a loss of A$2,1m, compared with a profit of A$13,5m the year before. It held A$2,2m in cash after raising A$2,0m through a share issue. Its management holds 1,6-million shares or about 0,22% of the issued share capital.
Be the first to Write a Comment!
Copyright © 2008 Business Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
