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Coal of Africa Ltd hit by adverse exchange rates

Adverse foreign exchange movements hit mining group Coal of Africa as half year losses widened.
Coal of Africa Ltd hit by adverse exchange rates
The company also reported no fatalities in the period...

Adverse foreign exchange movements hit mining group Coal of Africa (LON:CZA) as half year losses widened.

For the six months ended December 2015, the group reported a US$14.3mln net loss compared to US$0.8mln in the same period last year, due in part to foreign exchange losses of US$9.4mln.

Nonetheless, the group reported a cash balance of US$30mln at the end of the period, up from US$17.8mln in the six months prior.

Progress continued at the group’s Makhado coking coal project as it signed a memorandum of agreement to fulfil its black economic empowerment quota.

Coal of Africa does not expect the on-going environmental impact reviews of the area to affect progress at the site.

In November, the group announced the terms of an offer to acquire Universal Coal.

It previously stated its intention to acquire a cash generating business to boost cash flow during the construction of the Makhado project.

Earlier this month, shareholders approved the acquisition which is expected to be finalised by April this year.

The company entered into a non-binding memorandum of understanding with Chinese industrial conglomerate Zhongsheng Group Co Ltd for proposed equity investment in Baobab, a subsidiary of Coal of Africa and legal owner of Makhado.

Hengshun proposed to acquire 34% of the subsidiary for around $114mln cash, valuing the Makhado project at $335mln.

The triple-listed miner also renewed its licence at its 100%-owned Vele coking and thermal coal colliery for a further 20 years, amended in line with requirements for a plant modification project at the site.

Along with subsidiary MbeuYashu Proprietary Limited, Coal of Africa is in the process of challenging an order issued by Rio Tinto to repay a $75mln penalty. 

In breach of agreements relating to interest acquired in the Chapudi Coal Proprietary Limited, the group must pay now a remainder of $19mln, said Rio Tinto.

Coal of Africa is disputing the notice and plans to settle the obligations by June 2017.

Share price was down 9% to 2.00p.

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