Eskom wants more coal than miners can supply!
In a recent interview Wescoal CEO, Waheed Sulaiman, said that its relationship with Eskom presents great opportunities.
Eskom is literally asking for more coal than Wescoal can supply.
And with the export price of coal rising past $100 per ton from 2016 levels of $50’s per ton, there’s a massive market for coal.
So, with the CEO saying that “we are looking at new projects and opening up new areas”, it’s clear there are expansion opportunities!
Talk is cheap, but this little miner can deliver
Wescoal, even though it is only a mid-tier miner, can definitely start to deliver coal on a large scale to Eskom.
You see, the company acquired a coal mining project with its acquisition of Keaton Energy. The project, the Moabsvelden mine, is right next to one of Wescoal’s existing mines.
It could use the same coal processing plant to beneficiate coal – meaning less capital cost and no construction needed. That means rapid mine to market potential!
The Moabsvelden mine has reserves of around 43.8 million tonnes of coal just from open cast mining. Going underground could extend this by a big margin. Combining this operation with the one next door could add 2 million tonnes of coal production per year to Wescoal’s bottom line.
Now you might think that it’ll cost a lot of money to get this mine started in a short time…
And that’s true.
But Wescoal has the cash.
You see, recently the company was the recipient of a R160 million cash windfall!
It sold an old mine at the end of its life, as well as an exploration project that it does not plan on developing. This put R160 million cash into the company’s pocket. And with all this cash – Wescoal is perfectly poised for more growth.