In preparation for entering the coal export market, coal exploration and development company Keaton Energy has bought 74% of unlisted coal exporter Leeuw Mining for R74.8 million, payable mainly in Keaton stock issued at a price 15% above the levels at which Keaton has been trading on the JSE.

In a statement issued here, the company confirmed that the deal had been struck on a price of 450c per Keaton share, compared with yesterday’s opening price of 390c.

Keaton managing director Paul Miller said the main advantages of the deal were that it gave Keaton direct access to the export market, as well as ownership of a number of projects which were well advanced in their development.

The statement added that Keaton would also acquire an important new anchor shareholder ‒ Swiss energy trader Gunvor ‒ which would own up to 25% of the company. The controlling shareholder would remain the Pouroulis family, although its interest would be diluted from about 50% to around 40%. Keaton was founded by mining entrepreneur Loucas Pouroulis.

Leeuw was set up eight years ago in a BEE transaction with Anglo American’s coal division to acquire the Vaalkrantz anthracite colliery along with various other assets in KwaZulu-Natal.

Leeuw holds a 207 000tpa export allocation through the Richards Bay Coal Terminal, and owns a dedicated railway siding facility near Vaalkrantz. But the deal was structured on debt finance and Leeuw got into financial difficulties in 2009 during the global financial crisis when demand from its main customers in the metallurgical industry dried up. Miller commented, “Leeuw Mining became a distressed asset because the company was overgeared.”

He added that, in addition to the operating Vaalkrantz colliery and the RBCT allocation, Leeuw controlled four other coal properties in KZN and had already received new order mining rights for two of them while applications for mining rights had been put in for the other two.

“Combined with our existing Vanggatfontein and Sterkfontein projects this acquisition gives us more projects at multiple points along the development curve where a significant amount of the regulatory work has already been done,” said Miller.

 Minning Review