Exxaro Coal Central has been sold to privately owned BEE company Overlooked for an undisclosed sum.
Exxaro is selling some of its coal assets to a black economic empowerment group as it optimises its current coal operations and projects. The disposal of Exxaro Coal Central (ECC) follows an internal portfolio review.
The resources group said the review identified assets which were non-core to its future strategic objectives, resulting in the decision to sell its total equity interest in ECC and its Leeuwpan Coal Mine operation. It received significant interest in the assets, both on an individual basis as well as a package, before reaching a deal with Overlooked Colliery, a 100% black-owned mining company. Overlooked recently acquired the Overlooked Colliery and Weltrevreden Colliery from Sudor Coal. It also operates the Halfgewonnen Colliery. The company currently produces 2.4 million tons of coal a year and plans to double that by 2022 off its existing portfolio.
ECC includes the Dorstfontein, Forzando and Tumelo mines in Mpumalanga. Exxaro said it would retain all coal export entitlement through Richards Bay Coal Terminal.
Exxaro said the submission of the ECC transaction to the competition authorities and the Department of Mineral Resources and Energy would commence shortly. It expects the deal to close in the second half of the year, subject to their approval.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 asset,” the company said.
Exxaro said proceeds from the ECC sale would be used in accordance with its capital allocation framework. The disposal of the Leeuwpan Coal Mine operation was ongoing.
The company’s shares fell 1.6% to R174.20 on Friday.
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