The incumbent Board of Directors and Chief Executive Officer (CEO) were appointed in November 2015. Since their appointment, the Board and senior management have developed a business strategy for the Group for three distinct periods:
2016 to 2019
During this phase, the business strategy is focused on securing the project finance required in order to complete construction of the Boikarabelo coal mine, transformation and the early-stage diversification of the Group’s business model.
- Funding: The required debt funding is to be raised by way of project finance from a consortium of lenders. The project finance is dependent on the project being in a sufficiently mature form in order to stand as the primary collateral for the debt finance. This in turn will necessitate focus on:
- completion of the mining plan, project execution strategy, geological plan and Coal Resource statement reflected in the base case financial model (BCFM);
- confirming the underlying assumptions through review by independent technical experts appointed by the lenders together with securing contractual arrangements to support the expenditure and revenue assumptions;
- negotiation and finalisation of the principal EPC contracts; and
- conclusion of a viable logistics plan.
- Construction: On successful completion of the project financing, construction of the remaining infrastructure at the mine will begin. This infrastructure includes the coal handling and processing plant (CHPP), water and electrical infrastructure, drainage, roads, workshops and offices. On completion of construction, the commissioning phase will start, including developing a box-cut in order to access the first coal seam. Construction and commissioning phases are expected to be completed in Q2 of 2020 on the basis of first drawdown under the project financing agreements occurring in the first quarter of 2018.
- Transformation (employment and gender equity): In parallel with the project finance initiative, the Board has taken, and will continue to take, measures in order to transform the Group at all levels and maintain compliance with the terms of the Mining Right and Mining Charter.
- Health and safety: At the core of the Group’s strategy, health and safety will be overseen by a Risk Management Committee, and Risk and Compliance Officer, appointed in early 2016. There will also be oversight by the team formed to oversee project development.
- Diversification: The Group will undertake measures to submit an application for the approval of a 300MW independent power station in response to the anticipated request for proposal from the Department of Energy during 2018. As an independent power producer (IPP), the Group will have an alternative profit centre and will be able to transition from mining to the energy sector.
2020 to 2025
During this phase, the strategy will focus on:
- Completion of Phase 1 of the production target of 15Mtpa run-of-mine (ROM) and 6Mtpa of saleable coal. Studies will then begin to consider increasing production to achieve the Phase 2 target of 30Mtpa ROM and 12Mtpa of saleable coal. It is estimated that fully funded Phase 2 construction and production will not begin before 2025.
- Diversification: The Group will advance diversification to secure arrangements that would enable construction of an IPP.
2026 to 2029
This phase is targeted to realise:
- Securing funding and expanding the operation as envisaged under Phase 2.
- Commencement of an IPP construction.