Seriti in pole position for South32’s SA coal assets

Publication: Business Day.
Author: Lisa Steyn.

Mike Teke’s Seriti Resources has emerged as the exclusive bidder for South32’s SA coal mines, the Australia-listed miner announced on Thursday.

South32, a diversified mining company that was spun off from BHP in 2015, announced in 2018 its intention to sell off its SA thermal coal business. On Thursday, with the release of its annual results, the company announced that Seriti Resources was the exclusive bidder for SA Energy Coal.

Seriti is headed by Teke, who was formerly CEO of Optimum Coal, and it owns Anglo American’s old Eskom-tied coal mines.

SA Energy Coal assets include the Khutala and Klipspruit collieries and the Wolvekrans Middelburg Complex. Should a deal ultimately be concluded, Seriti would be catapulted into the position of SA’s second-largest coal producer, with Exxaro Resources ranking first by a small margin.

An exclusivity agreement gives Seriti the space to negotiate a sales agreement without the interference from external parties. Beyond that, the deal could still take another six months to a year to conclude while the parties obtain the necessary approvals from Eskom, the department of mineral resources and energy, and the competition authorities.

“Our announcement that we have entered into exclusive negotiations with Seriti is an important milestone and we expect to provide a further update to the market in the December 2019 half-year,” South32 CEO Graham Kerr said in a statement.

South 32 did not say what the offer price was, as it is still subject to negotiation.

The construct of the proposed deal is noteworthy as it “includes a modest upfront cash payment with a deferred payment mechanism, whereby both companies will share commodity price upside for an agreed period,” South32 said.

The commodity upside relates to the export price of coal, which is the source of most of SA Energy Coal’s free cash flow.

Considering this, South32 recorded an impairment charge of $578m after tax for the year to end-June 2019, which severely affected the financial results.

As reported on Thursday, the company’s revenues were up 4% but, due to the impairment and weaker prices for certain commodities, profits dived 71% from $1.3bn to $389m in 2019 and basic earnings per share were 70% lower.

South32’s board has, however, resolved to pay a final dividend of 2.8 US cents per share.

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Seriti welcomes South32 announcement confirming exclusive negotiations in respect of acquisition of SAEC

Johannesburg, 22 August 2019: Seriti Resources welcomes the announcement by South32 Limited that, following a comprehensive and competitive bid process, the companies have entered into exclusive negotiations regarding the sale and acquisition of South32’s South Africa Energy Coal (SAEC) business.

As confirmed by South32, Seriti’s offer includes an up-front cash payment with a deferred payment mechanism whereby both companies will share in any commodity price upside for an agreed period. The operational experience and sector expertise that Seriti would bring to these assets offers a strong base for the long-term sustainability of SAEC, to the benefit of all stakeholders.

Mike Teke, CEO of Seriti, comments: “This is an exciting step forward for Seriti, and we look forward to continued engagement with South32 as we work together towards concluding a binding agreement. Should a sale agreement be reached, these assets would become a further important anchor of Seriti’s domestically focused coal business. This would be a further significant investment in the South African mining sector by South African investors, backed by a proven track record of responsible operation.”

Queries:

Charmane Russell +27 11 880 3924 or +27 82 372 5816
Alan Fine +27 11 880 3924 or +27 83 250 0757

NOTES TO EDITORS:

About Seriti:
Seriti is a broad-based, 91% black-owned and controlled coal mining company. Seriti, through its operating subsidiary, Seriti Coal Pty Ltd, currently operates three large-scale, opencast and underground thermal coal mines, the New Vaal, New Denmark and Kriel mines, which it acquired from Anglo American, as well as various life extension coal resources and closed collieries. Together with its partners, Seriti intends to develop its New Largo project into a large-scale, opencast coal mine capable of providing the base load fuel requirements for Kusile Power Station.

Seriti is co-owned by four anchor shareholders – Community Investment Holdings (CIH), Masimong, Zungu Investments (Zico) and Thebe. It is Seriti’s philosophy that 10% of its equity be ring-fenced equally for the benefit of employees and communities through employee and community trusts.

As a responsible South African coal miner, Seriti has a proven track record in the acquisition, operation and development of large-scale opencast and underground coal mines. Guided by experienced board and management teams, Seriti maintains a principle focus on its long-term commitment to the domestic market and, in particular, the reliable provision of coal to Eskom.

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New Denmark Colliery Officially Hands Over Grade R Block

On Wednesday, 14th August 2019, New Denmark Colliery hosted a handover ceremony for the newly built Grade R Block at Ulwazi Primary School in Thutukani, Standerton. This project was funded by NDC as part of its corporate social responsibility programme. The ceremony was attended by representatives from the school, Seriti, Komatsu and the Department of Education.

As part of improving the learning environment, NDC invested an amount of R3, 782, 491.51 for the infrastructure project which comprises of 2 classrooms, an ablution facility, a kitchen and an official play area. Through this facility, NDC hopes the newly built block will add value to the learning of Grade R learners. Executive Mayor Cllr Lindokuhle Dhlamini emphasised the importance of education in building a strong and productive economy and nation. The Executive Mayor also pledged his commitment to supporting NDC with various CSR initiatives.

Seriti Coal’s CSR programme is aimed at assisting previously disadvantaged communities and includes six pillars including, Education, Portable skills training focusing on youth, Support to host municipality, Health and Sanitation, Poverty Eradication, and Enterprise and Supplier Development. The Chief People Officer, Thabo Masike thanked all the partners for a successful collaboration and added that government requires assistance to eradicate social ills in South Africa. “Seriti Coals aims to leave a lasting legacy” he added.

Circuit Manager Sofie Bohata from the Department of Education emphasised the importance of investing in early childhood learning. It is our duty through such partnerships to ensure we provide conducive learning environment for our children, said Sofia Bohata. This CSR initiative was a collaborative effort with Komatsu, which donated books and furniture. Komatsu’s Transformation Director Dinah Williams thanked Seriti Coal for the partnership and pointing Komatsu to areas in need. She advised the community to treasure the infrastructure as it is a legacy for their children.

Ulwazi Primary School is situated in Thutukani within the Lekwa local Municipality and it caters for approximately 498 learners. The school comprises of 10 classrooms and each accommodates 49 learners.


Community Development initiatives

Community Development initiatives

At Seriti we strongly believe in creating opportunities to develop our local businesses and the communities in which we operate. This commitment has influenced several initiatives identified to make a positive impact in our communities. As part of our community upliftment programmes, Seriti has recently provided free Wifi for the Deneysville community, offered the Skills Development programme and provided free cancer screening for locals and employees.

Free Wifi- Free WIFI will enable the community to access educational material, Seriti vacant positions and enterprise development opportunities.

Skills Development Programme- The programme was initiated with the aim to provide various technical skills to local SMMEs in the Vaal area. The programme comprises specialist training and mentorship and this forms part of the organisations continuous effort of empowering and creating sustainable growth to all its stakeholders.

Yolo Wellness cancer initiative- A collaborative effort between CANSA and Seriti aimed at providing locals and New Vaal Colliery employees with education and free screening of prostate cancer. In addition, as part of the cancer programme, the mine provided free testing kits for prostate cancer. This forms part of the organisations goal to help in the fight against prostate cancer.


Minister of Mineral Resources visits the Kriel Mine

Seriti CEO, Mike Teke, and the Kriel Colliery team celebrated a historic milestone with the Mineral Resources Minister, Mr. Gwede Mantashe, with the official opening of Block F at Kriel Colliery.

This newly opened section will extend the life of the mine with regards to underground production. Block F has approximately 60 million tons of coal, which means the mine will continue supplying coal to Eskom’s Kriel Power Station for the next 13 years.

As production in Block 7 and the North West shaft at the Kriel Colliery will soon be coming to an end, Block F will in future accommodate the current five underground CM sections. Block F was funded with working cost and it is envisaged to reach full production ramp-up of 4.5Mtpa (million tons per annum).


Seriti’s Teke awarded Brigadier Stokes Memorial Award

Publication: Mining Weekly.
Author: Marleny Arnoldi.

The Southern African Institute of Miningand Metallurgy has awarded coal producer Seriti Resources CEO Mike Teke with a Brigadier Stokes Memorial Award for his contribution to the mining industry and his leadership role in society.

The platinum medal presented to Teke last week by Seriti’s outgoing president Professor Sehliselo Ndlovu is considered the highest honour to be bestowed by the mining and metallurgical sector.

The accolade was instituted in 1980 to commemorate Brigadier Ralph Stokes’ influence in the South African mining industry.

The first award went to Harry Oppenheimer and it has since been awarded to mining veterans and businessinfluencers including African Rainbow Minerals founder and chairperson Patrice Motsepe, former AngloGold AshantiCEO Bobby Godsell, former Exxaro Resources CEO SiphoNkosi and Minerals Council South Africa CEO RogerBaxter.

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Anglo completes sale of New Largo to Seriti

Publication: Engineering News.
Author: Simone Liedtke.

Anglo American subsidiary Anglo American Inyosi Coal has completed the sale of the New Largo thermal coal project and the closed Old New Largo colliery, in South Africa, to New Largo Coal, which is co-owned by Seriti Resources, Coalzar and the Industrial Development Corporation.

The cash consideration payable for New Largo is R850-million, or about $65-million.

“I am delighted to announce the completion of the sale of New Largo to a majority black-owned and -managed company,” Anglo American South Africa deputy chairperson Norman Mbazima commented on Wednesday.

This sale marks the completion of Anglo’s long-standing strategy to exit its Eskom-tied coal assets.

Anglo also described it as another milestone in the sustainable transformation of the South African miningindustry.

Seriti, which is led by well-known mining personality Mike Teke, is 79% black-owned and is set to become power utility Eskom’s largest black controlled coal supplier, delivering about 24-million tonnes of coal a year to its power stations.

Seriti was, in April 2017, also selected as the preferred bidder to buy Anglo’s Eskom-tied New Vaal, New Denmark and Kriel collieries, as well as four closed collieries, for R2.3-billion.

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Mike Teke’s Seriti still has eye on Gupta coal assets as step towards big league

Mike Teke’s Seriti still has eye on Gupta coal assets as step towards big league

Publication: Business Day.
Author: Agency Staff.

Just like when you grow up there are things that you desire in a toy store, there are assets I desire to own

Seriti Resources CEO Mike Teke has reiterated that Seriti wants to become a coal exporter — and that it would be interested in buying the assets and quotas of the Gupta family’s Optimum Coal.

BusinessLIVE reported in March that Teke had an eye on the mine.

Bidding for Optimum Coal would pit Seriti, which has ambitions to become a black-owned mining champion, against bigger miner Exxaro, which has expressed interest in buying Optimum’s coal export quotas.

Optimum, which is in business rescue, has not clarified whether its assets are up for sale but Teke, who is also a shareholder in Seriti, used to own a stake in the company until Glencore bid for it in 2011.

“Yes I am interested,” Teke told Reuters on the sidelines of a mining conference in Johannesburg on Wednesday.

“I still believe I can run the mine, I still believe I can add value, I still believe I can change the bad things that have happened at that mine.”

Seriti already owns three coal mines, acquired a year ago from Anglo American in a $166m deal that marked the first step in creating what Teke, a teacher turned mining boss, aims to become a publicly traded South African black-owned mining company.

Seriti is co-owned by four black anchor shareholders — Teke’s investment company, Masimong Group; Thebe Investments; Zungu Investments (Zico); and Community Investment Holdings (CIH).

Seriti currently produces thermal coal for Eskom power stations that collectively generate about 23% of SA’s electricity, but Teke said it wants to move into exporting coal.

“My vision is I want Seriti to move into that tier where it’s a mining house that people will think of,” said Teke, a former chairman of industry group the Chamber of Mines (now the Minerals Council SA).

Running Optimum again would be a major step forward.

“Just like when you grow up there are things that you desire in a toy store, there are assets I desire to own,” he said, referring to Optimum Coal.

Bloomberg reports have suggested Glencore is also weighing buying back Optimum, which it sold to Oakbay Investments, owned by the Gupta family, for R2.1bn in 2016.

Glencore declined to comment on the matter on Wednesday.

Reuters

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Seriti has an eye on Optimum

Publication: Business Day.
Author: Allan Seccombe.

Eskom’s new black-owned supplier, Seriti Resources, has finalised a R2.3bn cash purchase of three collieries from Anglo American and is keen to get its hands on the Guptas’ embattled Optimum mine.

Mike Teke, Seriti’s CEO, was the head of JSE-listed Optimum before it was bought by Glencore. Knowing the colliery well, he said Seriti would be very interested if it came up for sale.

“I never wanted Optimum to be sold. I know it very well. I’ve not spoken to the board yet about Optimum but it’s something we can explore. If I presented it to them a plan will have to come up,” he said.

Having access to Optimum, a mine owned by the Guptas’ Tegeta Resources, which has placed the mine in business rescue, would give Seriti export thermal coal. This would be desirable if Seriti wanted to list, adding to the steady revenue stream from cost-plus supply contracts with Eskom.

Teke said he and another partner in Seriti were exploring vast coal deposits in the Waterberg and were in talks with the company about possibly vending them into the company.

The transaction announced in April 2017 marked the decision by Anglo to cut its exposure to the state-owned power utility, which was insisting on 51% black ownership of its coal suppliers, something the Anglo board would not countenance because it would become a minority partner.

Anglo was also frustrated at the eight years of haggling with Eskom over the construction of the New Largo colliery to supply coal, with the debate raging fruitlessly over who would fund the cost-plus Eskom-tied mine and the ownership of the mine.

Anglo has also agreed to sell its undeveloped New Largo colliery to a consortium that includes Seriti, leapfrogging the new resources company into the top tier of coal suppliers to the state power utility.

Global portfolio

Anglo CEO Mark Cutifani and Anglo American SA deputy chairman Norman Mbazima have said its sales process in SA had come to an end with the sale of the Eskom-linked mines and that it remained exposed to export thermal coal, iron ore, platinum group metals, diamonds and manganese from this country.

“This transaction continues the reshaping of our global asset portfolio based on value and the optimal deployment of capital, while realising value for our shareholders and ensuring reliable supply of coal to Eskom,” Cutifani said on Thursday.

The owners of Seriti, namely Masimong, Thebe Investment Corporation, Zungu Investments Company and Community Investment Holdings, which own 90% of the entity, provided funding towards the deal and secured debt from Standard Bank to fund the deal.

Community and employee trusts own the remaining 10% of the company.

“Seriti is committed to building a new South African mining champion and to providing Eskom with cost-effective, long-term coal supply solutions,” Teke said.

The sale also ticked a box for Anglo in creating a black-owned mining company with a solid set of assets, said Mbazima.

seccombea@bdfm.co.za

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