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KEATON IS ONE OF A number of listed and unlisted junior mining companies intent on breaking into the South African coal business. That’s turned out to be much more difficult than expected, given that – on the face of it – this should be a booming sector, with both Eskom and consumers overseas desperate to buy coal from SA’s miners.
It didn’t help that Keaton set up shop just in time for the great crash in late 2008, which hammered equity markets and commodity prices across the board. Coal export prices plunged, resulting in some coal miners switching export coal to the domestic market.
Keaton responded with a “cash preservation” strategy, holding back on planned developments until better times – which now seem to be materialising. Chairman David Salter comments its “batten down the hatches approach” was perceived by some investors as negative for the share price last year. He adds: “That may have been so. However, we believe our approach was correct, as we’ve emerged extremely well positioned to leverage off strengthening coal markets.”
At the micro-level, Keaton experienced an unexpectedly high incidence of armed robberies – nine in 20 months – at its Klip Colliery. Salter describes it as a “salutary lesson” on security, which will be a priority for the group’s next colliery at Vanggatfontein. He doesn’t go into details, but MD Paul Miller says the robberies targeted diesel fuel supplies on the mine. Miller says that’s a major problem for all coal miners in the Delmas/Ogies area but one very few coal groups have reported on.
Vanggatfontein was due to be in operation late last year but was delayed by market conditions and the decision by the Department of Mineral Resources to demand cash up-front for rehabilitation liabilities instead of accepting guarantees underwritten by insurance companies. Construction is now under way, with R172m being invested in Vanggatfontein – Keaton’s top development priority for 2010.
Ryan holds shares in Keaton.
It didn’t help that Keaton set up shop just in time for the great crash in late 2008, which hammered equity markets and commodity prices across the board. Coal export prices plunged, resulting in some coal miners switching export coal to the domestic market.
Keaton responded with a “cash preservation” strategy, holding back on planned developments until better times – which now seem to be materialising. Chairman David Salter comments its “batten down the hatches approach” was perceived by some investors as negative for the share price last year. He adds: “That may have been so. However, we believe our approach was correct, as we’ve emerged extremely well positioned to leverage off strengthening coal markets.”
At the micro-level, Keaton experienced an unexpectedly high incidence of armed robberies – nine in 20 months – at its Klip Colliery. Salter describes it as a “salutary lesson” on security, which will be a priority for the group’s next colliery at Vanggatfontein. He doesn’t go into details, but MD Paul Miller says the robberies targeted diesel fuel supplies on the mine. Miller says that’s a major problem for all coal miners in the Delmas/Ogies area but one very few coal groups have reported on.
Vanggatfontein was due to be in operation late last year but was delayed by market conditions and the decision by the Department of Mineral Resources to demand cash up-front for rehabilitation liabilities instead of accepting guarantees underwritten by insurance companies. Construction is now under way, with R172m being invested in Vanggatfontein – Keaton’s top development priority for 2010.
Ryan holds shares in Keaton.
