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Forum - Mining and Commodities Eh! (Morgan Stanley China - CAF)    All things commodities, with a Canadian Junior Miner focus.

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From: Jimjones1972 (Rep: 3) reply to Jimjones1972Date: 02/04/2018 11:27
Forum: Mining and Commodities Eh! - Msg #6117 - List CAF msgs Thread #673914972 (Rec: 0)
This article is from 2013, but it explains the difference between the type of coals that exist. CAF sells Metallurgical coal and the rarest and highest quality form of it called Anthracite.

Reply to Jimjones1972 - Msg #6116 - 01/31/2018 20:48

Why is the new deal that CAF made crucial for growing it's business?

I was reading over CAF's recent news and I overlooked something. CAF's subsidiary was purchased for $1.8 million USD(30%) in preferred shares in a private company, rather than cash. So why would CAF do this? There's a very good reason and it explains this in their last MD&A and in this news release. In South Africa, there is a movement where they want companies owned by black individuals to be part of white companies. This is not mandatory but optional. If you get a certain amount of black employee's and companies to join your business, you get rated on levels. The key level is as mentioned by CAF, (Level 4). Once this is reached, a whole bunch of new opportunities actually open up to the company. If CAF is looking for more big industry players and they already have BHP Bhiliton and ArcelorMittal(both multi billion dollar companies) as stated on their website, then sky is the limit for this company.

Below is a link and list of new opportunities available once you get to this stage:

Obtaining a Broad-Based Black Economic Empowerment (BBBEE) certificate for your company may seem like a lot of hard work, tedium and jumping through bureaucratic hoops – but it doesn’t have to be. A certificate can give you an edge over competitors and open up a lot of doors for business growth – and it might be easier to acquire than you think.

BBBEE policies are set out in the BBBEE Act (No. 53 of 2003) and reinforced by the Codes of Good Practice (last revised in 2015). Under this legislation, it is not compulsory for a business to obtain a BBBEE certificate – it is an entirely voluntary process. However, a certificate brings with it a lot of benefits – particularly for Qualifying Small Enterprises (QSEs). A QSE is a company that has an annual turnover of between R10 million and R50 million.

One of the biggest benefits of having a BBBEE certificate is being able to conduct business with government sectors (including municipalities) and public entities. A certificate allows a company to tender – and the higher the level of your certificate, the better your chances of winning. There are eight levels of BBBEE compliance, with Level 1 being the highest and most desirable.

Other advantages of having a BBBEE certificate include having a better chance of securing contracts with large companies and big industry names, because they are encouraged to do business with smaller BBBEE-compliant companies. A certificate allows you to participate as a supplier in the lucrative chain of preferential procurement.

A further benefit of having a BBBEE certificate is the impression it gives. A certificate shows that you care and that your business is committed to making a positive difference in socety. Remember that BBBEE policies are focussed on effecting transformation in the business world by empowering greater black economic participation. A BBBEE certificate can be promoted in your business’s marketing materials.

BBBEE certificates can be issued by verification agencies that are approved by the South African National Accreditation System or Independent Regulatory Body. Obtaining a certificate may not require special auditing – an affidavit may suffice. For example, a QSE that has 51% black ownership is automatically qualifies for Level 2 BBBEE status. If the ownership is 100% black, this grants Level 1 status.

Exempt Micro Enterprises (EMEs), which need to have annual turnover of less than R10 million, automatically acquire Level 4 status without needing any black ownership. Having black ownership immediately upgrades them to Level 1 status.

BBBEE certificates are valid for one year from the date of issue, and need to be renewed annually. Even though rules and regulations have become stricter with the policy changes that were introduced last year, it is still perfectly feasible to obtain a BBBEE certificate – and with all the benefits that having one brings, there is no good reason not to.

Original news release this week:

Canaf's South African subsidiary agrees to B-BBEE deal

2018-01-29 10:44 MT - News Release

Mr. Christopher Way reports


Canaf Group Inc. has released the terms of its Broad-Based Black Economic Empowerment, transaction for its South African subsidiary, Southern Coal Pty. Ltd.

As part of Southern Coal's continuing B-BBEE transformation program, Elkhat Pty. Ltd., a 100-per-cent black, privately owned company incorporated in South Africa, has agreed to acquire 30 per cent of the issued shares of Southern Coal, from Canaf's wholly owned subsidiary, Quantum Screening and Crushing Pty. Ltd., for the value of $1.8-million.

Quantum will, in return, receive cumulative, redeemable preference shares in Elkhat in the amount of the purchase price, $1.8-million. These preference shares shall provide preferential dividends, until redeemed by Elkhat. These dividends will be secured by an irrevocable direction from Elkhat to Southern Coal to pay Quantum such dividends from any distribution to Elkhat. The transaction will close on March 24, 2018.

Christopher Way, chief executive officer of Canaf, states: "It is my goal to ensure that Canaf, via its South African subsidiaries, expands and invests in South Africa and its neighbours. The agreement to sell 30 per cent of Southern Coal to Elkhat marks a significant and essential milestone in our B-BBEE transformation program; this program helps ensure sustainability and security for the corporation in South Africa, and subsequently only facilitates our long-term expansion goals in Southern Africa."

In addition to this transaction, Southern Coal is also pleased to confirm that it is well on track in ensuring that all other areas of its B-BBEE transformation plan, including its enterprise, socio-economic skills and supplier development programs are fully invested in so to ensure that the company reaches its desired level.

About Canaf Group Inc.

Canaf is a junior-mining-related group based in Vancouver, Canada, with subsidiary offices in the United Kingdom and South Africa. Canaf owns 100 per cent of Quantum Screening and Crushing Pty. Ltd., a South African-based company that owns 100 per cent of Southern Coal Pty. Ltd., a company that produces a high-carbon, devolatized anthracite.

We seek Safe Harbor.

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