AIM-listed SNR’s 74%-owned subsidiary Elitheni Coal owns and operates the promising Elitheni mine in the Eastern Cape of South Africa, which has a resource of more than 266 million tons on only 5% of the license that has been drilled to-date.
However, since it began development in 2006 it has fallen victim to various factors, including wash plant engineering and commissioning issues.
In the company’s May interim results, the board set an end of June/early July target for the delivery of coal from the mine to the nearby Port of East London for an anticipated initial coal shipment.
In an update on Friday SNR said it had agreed with offtake partner Trasteel International South Africa that the coal would now be ready at the end of July/beginning of August.
However, SNR said it agreed “the coal will be available for the customer’s collection from the port”, rather than being shipped.
The company reported in March that key delivery targets at the mine had been missed, which resulted in a failure to meet planned coal shipments to Trasteel for late January and early February.
"The SNR board acknowledges and regrets that key delivery targets have been missed due to various factors, including wash plant engineering and commissioning issues and the ongoing optimisation and supply chain challenges associated with establishing a mine in the Eastern Cape for the first time in over 100 years," SNR said in March.
"These challenges, which contributed to our failure to meet our planned shipment in late January early February, continue to be actively addressed by the company and Elitheni's management."
SNR said on Friday that underground operations at the mine had improved since then with help from technical consultants.
The wash plant continued to improve yields and more than 500 containers of washed product had been delivered to the port, SNR said.
Meanwhile, the coal producer said discussions with potential investors had been progressing “positively” and it was in advanced discussions with three interested parties.
“I am very encouraged by both the level of interest and the calibre of companies interested in becoming a strategic investor in SNR and am optimistic that we can conclude the right deal soon,” SNR acting chief executive officer Gabriel Ruhan said.
In the update SNR said it viewed an investment as an opportunity to accelerate the development of the mine and to secure the long-term funding required to allow it to refinance its existing short-term bridging loan with Land Consultants Limited, as well as provide funding for its general growth plans.
It denied recent press speculation that there was a potential takeover bid for the company and said its primary focus was on repaying its outstanding debt by the July 30 deadline.
“We have held encouraging discussions with LCL on the possibility of extending the term of the short-term bridging loan, should a transaction with a strategic investor not be concluded by the repayment deadline,” SNR clarified.
“In the event that an investment is not forthcoming, the board will have to consider alternative ways of repaying LCL and financing the company, including issues of equity or the taking on of additional debt.
“There can be no guarantee that such alternative funding will be available.”
