Minergy Limited on Thursday became the first mining company to list on the main board of the Botswana Stock Exchange. The Australian company with interests in coal mining and energy listed on the BSE following a successful private placement.
Minergy received 408 applications for 1,858,200 out of the 50 million ordinary shares of P1 each on offer from invited investors. Minergy managed to raise P72 million through private placement. With total issued capital of 376, 024, 867, Minergy says it decided to list all the issued shares on the main board of BSE in order to raise further development funding for pre-development work and the development of Masama Mine. In addition, the company said the listing will establish a platform for the future raising of development capital to realise the company’s growth plans as well as enhancing the regional profile of Minergy and to make the company a more attractive investment opportunity for market participants and investors.
After the private placement, the share structure of Minergy is made up of Minergy Mineral Resources with a 60.51 percent stake, African Alliance with 19.95 percent and Kgori Capital (previously Afena Capital) with 11.08 percent. Minergy Limited is the holding company of the Minergy Group which pursues mineral exploration, and is currently working towards the development of its Masama Mine on the southern edge of the Mmamabula Coalfield in Botswana.
The company says Masama Coal Resource is a unique coal asset that represents a low cost mine development opportunity, and the development of the Masama Mine represents the first step in the company’s strategy of becoming a mid-tier Southern African coal mining and energy company.
Minergy has revealed that assessments of the Masama Mine completed to date indicate that it will be capable of generating commercially attractive returns which would enable the company to pay attractive dividends. Furthermore, the company has said that the current management has significant mine development and operational experience and a wide range of expertise underpinned by strategic and practical knowledge of coal and energy markets in the region and internationally. Minergy plans to build an opencast coal mine with the potential to produce 2.4 Mtpa within 16 -18 months of the BSE listing. The company will focus on delivering high quality coal to the regional market, including Botswana and South Africa, and possibly the export market.
Minergy CEO, Andre Boje, accompanied by Minergy chairman Mokwena Morulane, CFO Morné du Plessis and members of the Board of Directors and Executive Management to the listing function, marked the occasion as “a great day for Minergy which marks the beginnings of a resurgence in the Botswana coal industry and Minergy will be the second producer in the country.” Furthermore, Boje says that “together with government and other industry players, Minergy will look to address the logistical challenges facing the coal industry in Botswana.”
“We are pleased to be listing on the Botswana Stock Exchange, we are in good company and as a responsible corporate citizen, we are committed to skills development and training and giving back to the communities in which we operate.”
The company has further plans to list on the Johannesburg Stock Exchange (JSE) in the latter half of 2017 or early 2018. The second listing will be done to fund capital requirements that exceed the funds raised during placements. Minergy has projected a total of P186.6 million for the proposed work capital expenditure for the development of the Masama Mine
Boje says coal will continue to play a major role in delivering energy access and security for a long time to come. “The International Energy Agency forecasts that coal will remain the largest single source of electricity generation until 2040. Coal still makes up 41% of global electricity generation and 29% of primary energy demand,” he says. It was also announced that since Masama coal reserve can be mined at low cost and low risk, it offers investors the potential of attractive returns and future expansion opportunities in foreign based earnings.
“Minergy's low cost competitive advantage lies in its shallow coal seams which allow extraction through opencast method at low strip ratios which will more than make up for any potential logistics disadvantages,” the company said in pre-listing statement before adding that the Masama Coal Mine is expected to generate significant free cash flow. Moreover, the company says this should present an opportunity to pay attractive dividends once the company is profitable and generates the required free cash flow. It will also enable the company to consider various opportunities for growth in the future.
“We expect that all Environmental Impact Assessments, feasibility studies and the approval of our mining license will be in place by the second quarter of 2018, with production commencing in 2018,” Boje says. The listing of Minergy and the development of the Masama Coal Project hold significant benefits for Botswana. “Management has appointed local managers and board members and job creation in Botswana will be significant. In addition, the listing on the Botswana Stock Exchange means that the people of Botswana will have another option into which to invest directly,” Boje said.
Thapelo Moribame, BSE’s Market Development Manager, said as part of the BSE Strategy for their five year plan (2017 – 2021), they intend to increase the number of listed companies both on the BSE, adding that they are happy to have Minergy Limited list on the stock Exchange after a fruitful journey to have the company list.
“As at yesterday, there were eight mining companies listed on the bourse. These had a market capitalization of P355.6 Billion out of the total market cap of P420.4 Billion. Minergy’s listing today increases our total equity listings to thirty-four and increases the total number of mining companies listed on the BSE to nine,” she said. Ms. Moribame added that the listing will add an extra P376 Million to the BSE’s market capitalization. She concluded by saying the listing of Minergy on the BSE is testament that the BSE is a viable platform for businesses to raise capital.
