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Coal of Africa and Frontier Mining feature in Fox- Davies Newsflash

Last updated: 09:15 23 Apr 2013 BST, First published: 08:15 23 Apr 2013 BST

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Daily Mining Monitor

Coal of Africa (LON:CZA) has announced changes to the Board, with the CEO stepping down and the Chairman becoming interim CEO.

In this news:

John Wallington, CEO will not be renewing his contract with the Company by mutual agreement with his executive role ending on 31 May 2013

David Brown, Chairman of CoAL, will become the interim CEO for a maximum period of six months whilst the appointment of a permanent successor will be progressed

Professor Alfred Nevhutanda, currently the Executive Director Corporate Affairs, has also by mutual agreement tendered his resignation from the Board with effect from 30 April 2013.

FD Comment:

The CEO stepping down, does not come as a surprise and has been an open secret since David Brown became Chairman. Performance at CZA has been exceptionally poor since he took over, although not all the blame can be put at the CEO’s door. It is difficult to see who will step in as the balance sheet is in disarray and we believe Haohua Energy International will have to step in again and at the current share price, will effectively take control of the Company. The muted asset sales of Woestalleen and Mooiplats won’t really help as we believe the US$37.5M Deutsche Bank facility is secured against Woestalleen and will have to be repaid, with the equity value less than the current outstanding loan facility.

Frontier Mining Ltd (LON:FML) has released an operational and financing update as it recommences operations at its flagship Benkala Copper Project.

In this news:

Agglomerated ore had been loaded onto pads before December to enable the immediate start-up, without the need for crushing stockpiled ore, or depending on activity resuming at the mine

Frontier anticipates shipping of cathodes to begin in the first week of June

Company continues to work on the expansion of the Benkala site to 10ktpa capacity

Will spend an additional US$6M of Capex on additional leach pads, improvements to the crushing and agglomeration process and general site enhancements

Company has now received credit committee approval from Sberbank to provide KazCopper LLP (Frontier's wholly owned subsidiary) with a loan and credit facility of US$17.9M

This will comprise a US$6M increase in the Capital Investment Loan at in interest rate of 9% and a US$11.9M increase in the Working Capital Credit Facility at an interest rate of 8.5%. All conditions of the existing loan arrangements remain unchanged

The additional loan brings the total amount of existing Sberbank facilities to US$52.9M.

FD Comment:

Frontier was operating on a pilot test basis and with the onset of winter, production ceased as planned. With the warmer weather and the earlier preparation of ore, Frontier hopes to quickly restart whilst upgrading the SXEW plant. If the increased debt facility is fully drawn down, the balance sheet is looking stretched with interest payments of ~US$4.5M pa, equivalent to 675t of Cu before costs, taxes and royalties.

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