THE BOURSE WHISPERER: Perth-based coal play ZYL Limited has been on the receiving end of two unsolicited expressions of interest from industry participants to either partner with or acquire the company.
ZYL has two coal projects located in South Africa, the Kangwane project and the Mbila project.
Kangwane location map. Source: Company web site.
According to ZYL the two approaching suitors have each executed a confidentiality agreement in favour of ZYL to facilitate an orderly exchange of information.
The company said, apart from the two EOIs presented so far, it may also consider further EOIs from other third parties.
Should this arise, ZYL has appointed Macquarie as financial adviser in relation to the current EOIs.
ZYL executive chairman Bevan Tarratt said in the company’s announcement to the Australian Securities Exchange that the receipt of the EOIs is not unexpected.
He indicated growing market recognition regarding the inherent value of the company’s asset portfolio.
Tarratt also highlighted the ever-diminishing supplies of high-quality anthracite in both the South African and global coal markets, a product the company is confident of producing from its Mbila and Kangwane projects.
ZYL also anticipates increasing the resource bases of its two projects.
Other factors to have attracted the EOIs, according to ZYL, include:
The proximity of the projects to key infrastructure such as railways, roads, ports and water supply, as well as sources of labour;
The short timeframe required to bring the projects into commercial production; and
The ability of the projects to increase production through organic growth over time.