25 May 2012

Ncondezi seeks £23.4m

13/01/2011 Robert Tyerman

Mozambique-focused Ncondezi Coal plans to raise $36.5 million (£23.4 million), chiefly to repurchase shares from key pre-float backers. The company, which floated on AIM in June with a £35.6 million placing at 123p, obtained its licences in that country's Tete province by issuing shares to the local Dos Santos family and is now buying these back for cash at 110.7p each, a 10 per cent discount to the float price.

British Virgin Islands-based Ncondezi, which had identified a potential coal resource of 1.8 billion tonnes on its Tete licences ahead of its flotation, says it intends to use some of the remaining proceeds from the placing, handled by broker Liberum Capital, to explore and develop two additional licences outside the Ncondezi Project area as well as funding logistics studies and evaluating possible acquisitions.

Chief executive Graham Mascall, former head of business development at mining giant Billiton and now also chairman of fellow AIM counter Gemfields, says the additional licences' geological features make them 'attractive coal exploration prospects'. 

Ncondezi shares, which peaked at 214p since flotation, have fallen 5.5p this morning to 198.5p on the fund raising news. Coal is in vogue now, though tapping the market to buy back shares from key asset vendors may not be so popular. 

But, if the assets look like justifying Mascall's optimism, Ncondezi should win further support over the medium term.        

Tags: AIM market, Commodities, Emerging markets

Sector: Mining

Companies: Ncondezi Coal Company

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