1 August 2013
By e-lodgement
CONTINENTAL COAL CONTINUES TO ACHIEVE OVERHEAD COST REDUCTIONS
RESIGNATION OF DIRECTOR
Highlights:
* Continental continues in its goal to successfully reduce corporate,
administration, finance, marketing and other general costs with significant
reductions and results achieved
* Administration costs in FY2013 reduce for 3rd year in a row and are 54%
below FY2012 costs
* Finance costs in FY2013 reduce by 44% on FY2012 costs and in line with
FY2011 costs
* Marketing and other costs in FY2013 reduced by 70% on FY2012 costs
* Restructure of Perth office and optimization of administration and finance
departments further reduces corporate overheads and personnel
Board Changes:
* James Leahy agrees to step down as a non-executive director with immediate
effect, thereby enabling the board to restructure
* Non-Executive Directors agree to an immediate reduction in fees of 25% and,
subject to shareholder approval, potentially up to 100% of fees to be paid
in equity rather than cash
Continental Coal Limited (ASX:CCC I AIM:COOL) ("Continental" or "Company") the
South African thermal coal mining company is pleased to advise that its ongoing
initiatives and focus to reduce costs and optimize its business activities have
successfully realized significant reductions in its corporate administration,
finance and marketing and other costs.
Based on the preliminary management accounts, the Company has achieved cost
reductions across all aspects of its corporate activities:
* Administration costs, across both the South African and Perth offices, for
FY2013 are at their lowest level since 2010. Costs of A$9.5m were incurred
during the year. This represents a 54% and 56% reduction on costs of
A$20.9m and A$21.8m in FY2012 and FY2011 respectively.
* Finance costs for FY2013 were A$11.4m. This represents a 44% reduction on
finance costs of A$20.1m in FY2012. Finance costs in FY2013 were broadly in
line with the A$11.1m finance costs incurred in FY2011.
* Marketing and other costs of A$3.0m in FY2013 costs were a 70% and 78%
reduction on marketing and other costs of A$10.0m and A$14.0m in FY2012 and
FY2011 respectively.
"The Company continues to look at ways that it can optimize its business
activities, particularly in the wake of the current market environment and the
impact that the fall in export thermal coal prices has had on our business. We
have reduced corporate administration costs for 3 consecutive years, marketing
and other costs are at their lowest level in 4 years and finance costs are also
at levels last seen in FY2011." Continental's Chief Executive Officer, Don
Turvey said.
"We have delivered these costs reduction over the past 12 months and during
some extremely volatile market conditions. These initiatives will continue and
we hope to be able to deliver further costs reductions in the coming year. I
believe that the cost reductions will ensure the Company is well positioned for
the future."
"We already have a robust and profitable domestic coal mining business in South
Africa that is supplying Eskom. In FY2014, our new Penumbra Coal Mine will be
increasing sales into the export market, and despite export prices having
fallen by over 30% over the past 12 months, its low cost of production and coal
hedging program - with approx. 25% of sales over the next 6 years locked in at
approx. US$118/t- will, with the continuation of these costs reduction
initiatives assist the Company in its transition towards being a profitable and
successful coal mining company" Mr Turvey added.
As part of the cost reduction and business optimization initiatives, the
Company has over the past quarter restructured its Perth office. Costs for the
head office have been reduced by approx. 70% over FY2013, with a number of the
administration and finance functions now managed and administered by the
existing finance and administrative personnel in South Africa. As part of this
restructure to the Perth office, DW Corporate were appointed to manage the
Company's company secretarial function in May 2013 with a number of costs
savings achieved.
In addition to the above, the Board of Directors has agreed to an immediate 25%
reduction in Non-Executive Directors Fees. Furthermore, it is proposed that
subject to Shareholder Approval and other regulatory restrictions, Directors
can elect to receive all or part of their fees in equity on a quarterly basis
based upon the prevailing share price. This will further reduce cash outflows
and allow a greater proportion of the Company's cash reserves to be allocated
to the Company's South African coal projects.
To assist in the Company's restructuring, Mr James Leahy has agreed to step
down from the Board of Directors as a non-executive Director with immediate
effect. The Board wish to thank Mr Leahy for his contribution over the past 2
years, particularly in assisting the Company with its listing on the London
Stock Exchange's AiM Market and interaction with UK based shareholders that has
resulted in a noticeable increase in UK based shareholders and trading on the
AiM market over the past year.
Attached is an Appendix 3Z for Mr James Leahy.
For and on behalf of the Board,
Don Turvey
Chief Executive Officer
For further information please contact:
Investors/ shareholders Don Turvey
Jason Brewer Chief Executive Officer
Finance Director T: +27 11 881 1420
T: +61 8 9488 5220
E: admin@conticoal.com
W: www.conticoal.comH
Media Nominated Advisor
David Tasker Stuart Laing
Professional Public Relations RFC Ambrian Limited
T: +61 8 9388 0944 T: +61 8 9480 2500
Broker
Jeremy Wrathall / Chris Sim
Investec Bank plc
T: +44 20 7597 4000
About Continental Coal Limited
Continental Coal Limited (ASX:CCC/AIM: COOL) is a South African thermal coal
producer with a portfolio of projects located in South Africa's major coal
fields including three operating mines, the Vlakvarkfontein, Ferreira and
Penumbra Coal Mines, are set to produce at an annualised rate of 2.8Mtpa of
thermal coal for the export and domestic markets. The Company's first
underground mine, the Penumbra Coal Mine, commenced development in September
2011 and produced first coal in November 2012. In 2011, a Feasibility Study was
also completed on a proposed fourth mine, the De Wittekrans Coal Project and
further optimisation studies completed in 2012. The Company has further
concluded strategic off-take and funding agreements with EDF Trading for its
export thermal coal production, signed a joint development agreement with
KORES, Korea Resources Corporation and secured debt funding from ABSA Capital
to fund its growth.
Forward Looking Statement
Certain statements made during or in connection with this communication,
including, without limitation, those concerning the economic outlook for the
coal mining industry, expectations regarding coal prices, production, cash
costs and other operating results, growth prospects and the outlook of
Continental's operations including the likely commencement of commercial
operations of the Penumbra and De Wittekrans, its liquidity and the capital
resources and expenditure, contain or comprise certain forward-looking
statements regarding Company's development and exploration operations, economic
performance and financial condition.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be given that such
expectations will prove to have been correct. Accordingly, results could differ
materially from those set out in the forward-looking statements as a result of,
among other factors, changes in economic and market conditions, success of
business and operating initiatives, changes in the regulatory environment and
other government actions, fluctuations in coal prices and exchange rates and
business and operational risk management. For a discussion of such factors,
refer to the Company's most recent annual report and half year report. The
Company undertakes no obligation to update publicly or release any revisions to
these forward-looking statements to reflect events or circumstances after
today's date or to reflect the occurrence of unanticipated events.
Appendix 3Z
Final Director's Interest Notice
Information or documents not available now must be given to ASX as soon as
available. Information and documents given to ASX become ASX's property and may
be made public.
Introduced 30/9/2001.
Name of entity Continental Coal Limited
ABN 13 009 125 651
We (the entity) give ASX the following information under listing rule 3.19A.3
and as agent for the director for the purposes of section 205G of the
Corporations Act.
Name of director James Leahy
Date of last notice 26 April 2013
Date that director ceased to be director 31 July 2013
Part 1 - Director's relevant interests in securities of which the director is
the registered holder
In the case of a trust, this includes interests in the trust made available by
the responsible entity of the trust
Note: In the case of a company, interests which come within paragraph (i) of
the definition of "notifiable interest of a director" should be disclosed in
this part.
Number & class of securities
1,144,006 Ordinary fully paid shares
1,000,000 Unlisted Options exercisable at $0.75 expiry 31 December 2013
Part 2 - Director's relevant interests in securities of which the director is
not the registered holder
Note: In the case of a company, interests which come within paragraph (ii) of
the definition of "notifiable interest of a director" should be disclosed in
this part.
In the case of a trust, this includes interests in the trust made available by
the responsible entity of the trust
Name of holder & nature of Number & class of securities
interest
Note: Provide details of the
circumstances giving rise to
the relevant interest
Part 3 - Director's interests in contracts
Detail of contract N/A
Nature of interest N/A
Name of registered holder N/A
(if issued securities)
No. and class of securities to N/A
which interest relates
Date of this Notice: 1 August
2013