SILICA and anthracite miner Petmin was considering issuing a limited number of shares when it listed on London’s Alternative Investment Market later this year, CEO Jan du Preez said this week.
Petmin said, when it released financial results for the year to June on Monday, that it had received Reserve Bank approval in principle for a secondary listing in London. Du Preez said the target date for the listing was early December.
He told media visiting the company’s Somkhele anthracite project in KwaZulu-Natal that Petmin recently had investigated, and rejected, two potential acquisitions. If it made an acquisition, it made sense to issue more shares, but after recently raising R85m in equity and R40m in an asset-based facility from Standard Bank, it had no immediate need of capital, Du Preez said.
Petmin’s UK advisers, Numis Securities, recommended issuing some new shares on listing in London. If an acquisition was made, Petmin would issue more shares in London only within the authority granted by shareholders at the latest annual general meeting, Du Preez said.
The main reasons for seeking a secondary listing are that it will provide an alternative platform if it wants to acquire international assets, as some vendors prefer paper listed in London to the JSE.
Petmin’s shares are trading at 140c, close to the 12-month peak of 150c. The price has more than doubled in the past 12 months despite the issue of additional shares to develop the Somkhele Project. Somkhele would be developed in two phases, Somkhele CEO Mark Snelling said.
Work had begun on the first phase, which would target an initial run of 480000 tons a year, rising to 500 000 tons once roads and infrastructure were in place.
In the second phase, production would be raised to 950000 tons run-of-mine a year by 2010.
A processing plant to crush and wash the anthracite with an initial capacity of 40 000 tons a month will also be built, with potential to double output on a double-shift basis.
Du Preez said about half of Somkhele’s anthracite would be sold to local titanium and ferrochrome companies.
The resource was unique in SA for having low levels of volatile matter (products released at high temperatures) and high levels of carbon.
It was also low in sulphur and phosphorus, making it ideal for metallurgical uses, he said.
It can be blended with output from Petmin’s Springlake colliery near Dundee to reduce the sulphur content of Springlake anthracite and open up new markets in SA and Europe.
Petmin’s share of the anthracite market is 29% but once Somkhele is at full capacity, this will rise to 42%.
Since Petmin bought Springlake late last year, it has been addressing problems at the colliery identified in its due diligence investigation.
On revenue of R86,1m for seven months, Springlake delivered only R1,8m net profit, contrasting with Petmin’s silica operation, SamQuarz, where net margins were 21%.
But at optimum production, Petmin’s anthracite operations should deliver better net margins than the silica operations, Du Preez said
© 2009 Petmin Limited