www.snrplc.co.uk
SNR intends to develop, own and manage natural resource extraction enterprises in southern Africa. SNR will concentrate, initially, on managing the development of and the investment in the Elitheni Mine, in the Gubahoek/Macubeni area of the Eastern Cape. Further opportunities both in South Africa itself and elsewhere in the southern part of the continent will be followed up as they arise. The company’s main country of operation is the Republic of South Africa.
Strategic Natural Resources shares soar on financing news for Elitheni project
Shares in Strategic Natural Resources (LON:SNRP) soared 20 percent today as the firm revealed further positive news for its Elitheni coal project in South Africa.
This time it was a financing boost in the form of a £1.9 million share placing to buy equipment to bolster the supply of coal from the mine in the Eastern Cape.
The firm's largest shareholder - Cooch 1095 Ltd - is acquiring all 10 million shares being issued. The placing has been priced at 19 pence a share - representing an impressive 38 per cent premium to yesterday's closing price of 13.75 pence.
As at 12.05pm SNRP's shares were up 20 percent, or 2.75 pence, to trade at 16.5 pence.
'Elitheni' in the South African language Xhosa means "the place of new beginnings, like the dawn of the new day" and this is precisely what SNRP plans for the project, which already hosts a proven 150 million tonne resource.
In early April the firm revealed that it had signed an off-take deal with Swiss-based commodity trader Trasteel International for the supply of its coal.
The firm said today the new equipment funded from the placing will be used to begin underground mining at Elitheni and this, coupled with the initial opencast production, will ensure that initial sufficient tonnages of mined product are available for supply.
The first shipment of coal is due to be loaded by June 2012 and the agreement is for an initial 2 million tonnes of coal but Trasteel has also been granted the right of first refusal on the next 2 million tonnes.
The coal will be shipped through the Port of East London in the Eastern Cape of South Africa and Strategic Natural Resources reckon it will ship around 500,000 tonnes in the first year of operation.
The company has previously pointed out that this represents less than one per cent of the already proven 150 million tonne Elitheni coal deposit.
In March it said it had earmarked US$2.5 million for a drilling exploration programme designed at increasing its resource base.
In a note released today, analyst Andrew McGeary, of broker Northland Capital Partners, pointed out that today's placing was an "interim financing" and the company was working on a longer term financing option, which it expected to announce shortly.
He also highlighted that the firm had a substantial coal resource at Elitheni of 150 million tonnes so the existing agreement reflected only a modest portion of potential production and the company was looking to secure similar deals.
In today's statement, chief executive of Strategic Natural Resources David Nel had said: "The company continues to develop its longer term financing strategy and, as reported in the chairman's statement in the company's annual report, we expect to be in a position to make an announcement updating shareholders on our financing plan in the near future.
"This interim placing of £1.9 million merely ensures that we will not lose momentum in terms of our commitments to Trasteel."
As a condition of today's placing, Cooch is entitled to appoint one representative to SNR's board, it added.
