After an extremely positive and profitable first two quarters to the financial year, Q3 reflects an expected short-term period of depressed Sales, and subsequent reduction in earnings. Despite Sales reducing significantly for the period, the Corporation remained profitable, again demonstrating its resilience in difficult trading conditions. Sales are expected to increase slightly for Q4 and Q1, 2018.
Revenue for the 9-month period increased to $8,443,667 in comparison to $2,907,198 for the same period last fiscal year. The Corporation recorded a net income of $595,716 (C$741,080), in comparison to a net loss of $335,864 for the same period the previous year. Adjusted EBITDA rose to $881,885 (C$1,097,080) for the period.
The Corporation continues to understand that for Southern Coal to reach its full potential, its customer bases needs to increase so to reduce its reliability on key suppliers. Southern Coal is continuing to work with a new potential major customer to supply product in South Africa and remains hopeful for trial loads to be dispatched in Q1 or Q2 2018.
The board believes that it is in the interest of the Corporation, and its shareholders, that Southern Coal (Pty) Ltd., achieves a Broad-Based Black Economic Empowerment, (“B-BBEE), Level 4 rating during the fiscal year 2018. During the quarter the Corporation can confirm that it has had discussions with its customers over the need for Southern Coal to improve its current B-BBEE rating so to remain compliant with its customers own supplier requirements. During the coming three months, the Corporation expects to announce the details of a deal that is currently being negotiated and finalized by specialists. All in all, the board is of the belief that the final deal that will be agreed will be one that will ensure sustainability and offer growth opportunity for the South African business.
The Corporation intends to continue to generate positive free cash flow during the fiscal year-end 2017 and will focus on increasing shareholders’ value, as well as investment to improve the efficiency of its older facilities, or investment into related business opportunities in South Africa
The Corporation has an agreement to lease premises for its coal processing plant in South Africa for a term of ten years, expiring on December 31, 2020. The agreement offers the Corporation, in lieu of rent, feedstock coal to be delivered to its adjacent premises, which it purchases at market price. Should the Corporation decide to purchase feedstock coal from an alternative supplier which the lessor is otherwise able to provide, then a monthly rent of Rand 200,000 ($14,846) is payable. To date, the Corporation has not been required to pay any rent for the premises as it has continued to purchase feedstock coal from the landlord.
The bank loan bears interest at 9.25% per annum, matures on January 7, 2019, and is secured by the Corporation’s furnace acquired with the proceeds from the loan. The bank loan is repayable over 42 months in blended monthly payments of Rand 393,779 ($29,230 translated at October 31, 2016 exchange rate). During the period ended July 31, 2017, the Corporation incurred interest expense totaling $42,420 (October 31, 2017 – $71,721).
In August 2006, Canaf, then known as Uganda Gold Mining, announced the termination of any further investment into its Kilembe Copper-Cobalt Project in Uganda. Since 2007, the Corporation has been involved in a legal dispute with Kilembe Mines Limited, (“KML”). In January 2013, the High Court of Uganda referred the case back to arbitration for settlement. On May 29, 2013, a preliminary meeting was held between the Corporation, KML and the arbitrator. The Corporation can confirm that further meetings were scheduled for August 2013, after filings of amended statements of defence and claims had been submitted. Since the initial meeting however the Government has awarded a deal to a Chinese Consortium to manage and operate KML. The Corporation’s appointed Ugandan Advocates have notified the board that the Arbitrator has stepped down for personal reasons. The Corporation’s Uganda Advocates and the Government’s Solicitor General have agreed to a new Arbitrator, Retired Justice James Ogoola. The parties held a preliminary meeting with the Arbitrator who requested them to provide him with their fee estimate for the conduct of the Arbitration. The estimate has since been provided to the Arbitrator who is yet to confirm whether or not he is agreeable to it. In the meantime the Corporation appointed SRK Consultants to prepare a brief document to quantify the ‘lost opportunity’ value of the termination of the Kilembe Project. During the current financial year the Corporation will utilize this document to assist in the submission of a revised claim against KML. The Corporation has received no new information since 2014, and the Corporation remains unable to give an indication of either the quantum or any likely date by which a settlement will or will not be reached. The original claim, before costs, is for a money sum of US$10,370,368 as at January 24, 2007.
CAF.V is starting to gain momentum as a bunch of news is coming down the pipeline in the next 60-90 days. Remember, this is easily the most undervalued earnings based company on the venture exchange. Trading at a 3.3X multiple(similar companies are 15-20X), and with an Asset/Debt Ratio of roughly 3:1, leveraged towards the USD. Just over 47 million shares outstanding with 33% insider held. CAF refines coking coal used for the steel industry, not typical coal that you find everywhere for burning. It's a special type of coal that only makes up 1% of the world coal reserves. BHP Bhiliton is Canaf's long term client and the largest producer of coking coal in the world, so it's very dependent even on a small company like CAF.
What to expect in 90 days:
- Year End Results February 2018 - Q1 2018 Results March 2018 - Update on a major deal that was announced in the MD&A
CAF has already generating $1.1 million CDN in profit for 2017 over 9 months. In their MD&A it clearly states that Q3 was a weaker quarter and that Q4 2017 and Q1 2018 will have increased sales which will obviously generate larger profits. Recently South Africa had an election and the new leader is very pro business and could usher in major reforms to make South Africans companies more profitable.
All information can be found on Sedar for those that want to confirm all this.
typo, $750K CDN profit over 9 months not $1.1 mil CDN.
CAF.V Subsidiary Information - Quantum Screening & Crushing
Canaf Group owns 100 percent of Quantum Screening and Crushing (Proprietary) Limited, ("Quantum"), a private South African company that focuses on anthracite beneficiation.
Quantum produces calcined anthracite, a product used primarily as a substitute to coke in the manufacturing process of steel and manganese. The company's two largest clients are world leaders in steel and ferromanganese production, namely ArcelorMittal and BHP Billiton respectively. Quantum has an operation near Newcastle, KwaZulu Natal, where its two kilns operate, de-volatising the raw material anthracite, known as calcining. The majority of Quantum's feedstock anthracite is supplied by the neighbouring Springlake Colliery, which has reserves in excess of 20 years.
Calcining is a process whereby anthracite coal is fed through a rotary kiln, at temperatures between 850 and 1100 degrees centigrade; the volatiles are burnt off and the effective carbon content increased. The final product, referred to as 'calcined anthracite' is used as a coke substitute. Calcined anthracite is used as a reductant in the manufacture of steel and manganese, as well as other sintering processes. Quantum, through its wholly owned subsidiary Southern Coal (Proprietary) Limited, ("Southern Coal") has been profitably carrying on this business since 2004.
Location and Plant
Quantum is situated in Newcastle, KwaZulu Natal, South Africa. The majority of the feedstock anthracite is supplied by Springlake Colliery which has reserves in excess of 20 years, whose coal siding is strategically located adjacent to Quantum's facility.
Quantum runs two independent lines of production which each consist of pre-heating stage feeding a main rotary kiln. The raw material, anthracite is feed into an electrically heated rotary pre-heater, which raises the temperature of the product to about 800 degrees C. The pre-heated (and red hot) anthracite is then fed into the main, refractory lined, rotary kiln. It is at this stage of the process that extra raw material is added to the main kiln. The temperature of the main kiln is then controlled to remain above 1000 degrees C so that calcination of the anthracite occurs and maximum amount of volatile matter is burnt off.
The final stage of the process involves the oxidization of any excess volatiles in the after-burners/oxidizers, before emission to the atmosphere.
Screening and Crushing Plants
Since the Company acquired Quantum in 2007, significant investment has been made in crushing and screening equipment. Quantum now has the ability to offer existing and potential customers a range of size productsm which subsequently opens up other markets.
Quantum has 2 independent screening plants, which are capable to dry screen down to sizes as small as 6mm.
Profitability, Performance and Expansion Program
Quantum Screening and Crushing has been operating profitably since the Company acquired it in 2007.
Quantum Screening and Crushing has built up a fine reputation for product quality and reliability of supply, which has earned the respect and preference from two of the major steel and manganese producers in the world. Canaf believes that as long as Quantum maintains its focus on its core values, coupled with the ever-increasing demand of calcined anthracite as a replacement to coke in the reductant market, that the business will continue to expand and potentially become one of the major reductants and low volatile reductant suppliers on the continent.
2018-01-04 13:33 MT - News Release
Mr. Christopher Way reports
CANAF ANNOUNCES SAD LOSS OF ZENAIDA MANALO
Canaf Group Inc. is deeply saddened about the sudden passing of Zenaida (Zeny) Manalo.
Ms. Manalo was appointed chief financial officer of Canaf in June, 2010, and was a dedicated member of the corporation. She was much respected and liked by all who dealt with her and will be greatly missed by many. The corporation extends to Ms. Manalo's family and friends its deepest sympathies and is grateful for all the years of service she gave to Canaf.
The company is in the process of identifying a replacement for the vacancy she leaves, and further announcements will follow in due course; in the interim, her duties are being taken care of by other members of the executive team.
That director who passed away owned no shares of CAF and was getting paid a decent salary for years. Time to replace her with someone more serious that's willing to take a position in Canaf Group
Canaf appoints Sinclair director, CFO
2018-01-09 17:49 MT - News Release
Mr. Christopher Way reports
CANAF ANNOUNCES APPOINTMENT OF DIRECTOR AND CFO
Canaf Group Inc. has appointed Derick Sinclair as a director and chief financial officer effective immediately.
Mr. Sinclair has more than 25 years experience in accounting and financial management. Mr. Sinclair received his bachelor's degree in commerce from the University of Windsor, Canada, in 1982 and has been a member of the Institute of Chartered Accountants of British Columbia since 1985. He began his accounting career in 1982 as an auditor with KPMG Peat Marwick Thorne and then joined BC Rail, at the time Canada's third-largest railway, as a treasury analyst in 1985. He progressed through BC Rail's finance department and served as its manager of general accounting. He served as a director of fleet management for BC Rail Ltd. from December, 1992, to March, 1996. He was appointed CFO of BC Rail's telecommunications spinout company in 1996, and stayed through two sales in 1998 to RSL Communications Ltd., a global telecommunications company, and in 2001 to SaskTel, a leading telecommunications company in Saskatchewan. He left SaskTel in 2003 to form DR Financial Services, which provides CFO and other services.
Mr. Sinclair is currently the CFO for several privately held, Canadian Securities Exchange- and TSX Venture Exchange-listed companies. His experience as a financial executive with exemplary leadership and understanding of corporate needs and developments gives Canaf great confidence he will achieve a seamless transition replacing Zeny Manalo as the CFO.
2) https://en.wikipedia.org/wiki/Anthracite Anthracite is categorized into standard grade, which is used mainly in power generation, and high grade (HG) and ultra high grade (UHG), the principal uses of which are in the metallurgy sector. Anthracite accounts for about 1% of global coal reserves, and is mined in only a few countries around the world. China accounts for the majority of global production; other producers are Russia, Ukraine, North Korea, South Africa, Vietnam, the UK, Australia, Canada and the US. Total production in 2010 was 670 million tons.
- “Our anthracite coal business was up more than 40%, so once again, R&N is ‘The Road of Anthracite.’ This explosive growth was fueled by a late-year announcement of a major sale of Pennsylvania anthracite to the Ukraine, replacing Russian coal. Following a July announcement of the deal at the White House, R&N was told to prepare to move more than 300,000 tons of anthracite by year end. We stepped up and managed to provide all the cars needed for the business and served as many as eight different origins as the entire anthracite community pulled together to fill this huge order. We are hopeful that this business will continue in 2018.”
Kadin also hoped to cooperate with VCCI in coal production, especially anthracite coal. "So far, Indonesia has imported a lot of anthracite coal from Vietnam for iron smelting and to meet the needs of smelters," he noted. In connection with that, Ganefor hoped for a barter with Indonesia; for example, exporting aircraft, cocopeat, and others to Vietnam, while that country exports anthracite coal and others to Indonesia, with regard to balance trade between the two countries.
** Key thing to take away from this article is that they specific Anthracite coal above other commodities even though this is meant to be a general meeting**
Canaf's South African subsidiary agrees to B-BBEE deal
2018-01-29 10:44 MT - News Release
Mr. Christopher Way reports
CANAF ANNOUNCES B-BBEE TRANSACTION FOR SOUTH AFRICAN SUBSIDIARY
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, R18million (C$1.8million approx). 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 24 March 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% 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.
Canaf is a public company listed on the TSX-V Exchange. Canaf's head office is in Vancouver, Canada, with subsidiary offices in the United Kingdom and South Africa. Canaf owns 100% of Quantum Screening and Crushing (Pty) Ltd., ("Quantum"), a South African based company that owns 100% of Southern Coal (Pty) Ltd., ("Southern Coal"), a company that produces a high carbon, de-volatised anthracite. As of 29 January 2018, Quantum agrees to sell 30% of its shares in Southern Coal for the net consideration of R18million; the transaction will close on 24 March 2018.
About Southern Coal
Southern Coal produces calcined anthracite, a product used primarily as a substitute to coke in sintering processes. Southern Coal produces calcined anthracite by feeding washed anthracite coal through a rotary kiln, at temperatures between 900 and 1100 degrees centigrade; the volatiles are driven off and the effective carbon content increased.
Southern Coal's two largest clients are African leaders in steel and ferromanganese production. Southern Coal operates near Newcastle, KwaZulu-Natal, where Quantum's three kilns operate; the majority of Southern Coal's feedstock anthracite is supplied from local anthracite mines in KwaZulu-Natal.
Right now there is a major program going on in the same region of South Africa for Cannabis cultivation and CAF's operations are right there. If you look below, you'll be able to connect the dots. Not saying this will happen for sure, but it's very possible.
CAF Company Description: Canaf Group Inc. is a Canada-based company, which focuses on investing and developing in the markets of Africa. The Company owns a coal beneficiation facility in South Africa, Quantum Screening and Crushing (Pty) Ltd. (Quantum). Quantum, through its subsidiary, Southern Coal (Pty) Ltd., processes anthracite coal into de-volatized (calcined) anthracite for sale mostly to steel and ferromanganese manufacturers as a substitute product for coke. Quantum has an operation near Newcastle, KwaZulu Natal, where its kilns operate, de-volatizing the raw material anthracite, known as calcining. Quantum's feedstock anthracite is supplied by the neighboring Springlake Colliery. Quantum runs over two independent lines of production, which each consist of pre-heating stage feeding a main rotary kiln. The final stage of the process involves the oxidization of any excess volatiles in the after-burners/oxidizers, before emission to the atmosphere. Quantum has over two independent screening plants.
So the Province the company is located in is "KwaZulu Natal", remember that.
From CAF's last new release: 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."
From Wikipedia: https://en.wikipedia.org/wiki/Cannabis_in_South_Africa Cannabis grows well in South Africa's climate, especially in the "dagga belt", an area including the Eastern Cape and KwaZulu-Natal provinces where, per the 2011 International Narcotics Control Strategy Report, it is a traditional crop. According to GroundUp, cannabis is "an important cash crop" that "sustains entire communities in the rural Eastern Cape", which otherwise survive in a subsistence economy. Rural farmers are typically poor and produce low quality local product that is consumed domestically by the lower class, while middle class growers produce product for the rest of the national and international marijuana market. Most of the national product is consumed domestically or regionally, but increasing amounts are seized in Europe.
KwaZulu-Natal emerging farmers are going to get the chance to cultivate a “miracle crop” that has the potential to transform the South African economy, while creating thousands of much-needed jobs. And the plant that will be grown in six rural areas of the province to help to bring prosperity to the region and the country is cannabis, also known as hemp or dagga
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 ANNOUNCES B-BBEE TRANSACTION FOR SOUTH AFRICAN SUBSIDIARY
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.
Also in news, there are numerous countries defying sanctions such as China, Russia, Taiwan, Vietnam and others to try and secure supplies of coking coal from North Korea. If countries are that desperate for this type of coal and willing to risk backlash from it, you know the world supply is diminishing quickly.
Why did I post all these articles? Because CAF.V is in the right place at the right time and their last 9 months show this because of the tremendous growth in sales and profits associated with the supply crunch. Stock will be one of the gems of the TSX-V in 2018
Near a multi year high. When you factor in all the current events that are bullish for the price, this is a perfect storm for any company in this sector.
Here are three important factors that will significantly increase the value of CAF:
1) Sales. As reported in their last MD&A, sales are lower than usual apparently, but prices are much higher. However, the next quarters coming up will show increased sales. From the MD&A:
For the 9-month period ended July 31, 2017, the Corporation reported a net income of $595,716 (C$741,080) compared to a net loss of $315,919 for same period the previous year. The increase in net income was directly related to an increase in sales during the period, as well as improved profit margins generated from efficiencies generated from Quantum s new calcining facility, which only started fully operating in August 2016. Revenue increased to $8,443,667, in comparison to $2,907,198, for the same period last year. The significant increase in sales is due to a combination of unusually low sales during the last fiscal period combined with increased prices per sales unit. The Corporation expects to report a slight increase in Sales during Q4 and expects fiscal year end 2018 to reflect increased demand as the Corporation hopes to bring on a new customer.
2) Price of Anthracite(coking coal) for steel manufacturing. This is important as increased sales and higher commodity prices go hand and hand. From the chart below, coking coal is near multi year high's. Problem with the chart is it's general coking coal pricing and not showing the premium CAF gets for it's Anthracite coal, which is rarer and more valuable.
3) Rand/USD/CAD Exchange rate. There are many public companies that have good sales, but the exchange rate can either make of break them. In our case, the Rand is getting stronger as a new pro business leader is sworn in and Jacob Zuma leaves. But not only that, the CAD is getting weaker at the same time. This means that once Canaf converts their Rand into USD, then it must be converted into CAD to reflect it's proper value on the TSX Venture, thus giving us an additional premium. The rand is still near a 2 year high versus the USD.
Remember, the stronger the Rand, the more CAF profits convert into USD. Plus the new leadership is pro business and will make the economy stronger.
Canaf terminates B-BBEE agreement with Elkhat
2018-02-21 14:13 MT - News Release
Mr. Christopher Way reports
Canaf announces termination of B-BBEE Agreement for South African Subsidiary
Canaf Group Inc. has terminated the agreement to sell 30 per cent of its subsidiary to Elkhat Pty. Ltd., as part of its Broad-Based Black Economic Empowerment, transaction. Further to the announcement on Jan. 29, 2018, the company advises that a letter of termination has been issued to Elkhat Pty. Ltd., after the parties failed to agree final terms of the transaction. The company remains confident that it will complete its B-BBEE transaction for its South African subsidiary, Southern Coal Pty. Ltd., with a new partner, which has already been identified. The terms of any new agreement will remain the same in principal and the company expects the new transaction to close by May 18, 2018.
Christopher Way, chief executive officer of Canaf, states, "Despite Elkhat and the company not being able to agree on final terms of the transaction, the company remains confident that it will achieve its B-BBEE goals during the current fiscal year and we remain optimistic of the opportunities that will arise from such a transaction."
About Canaf Group Inc.
Canaf is a public company listed on the TSX Venture Exchange. Canaf's head office is 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.
Canaf Group earns $541,808 (U.S.) in fiscal 2017
2018-02-23 13:13 MT - News Release
Mr. Christopher Way reports
CANAF ANNOUNCES FINANCIAL RESULTS FOR YEAR ENDED 31 OCTOBER 2017
Canaf Group Inc. has released its financial statements and management's discussion and analysis for the year ended Oct. 31 2017.
For the year, revenue increased to $10,669,117 (U.S.) from $4,703,528 (U.S.) the previous year, and the corporation recorded a net profit of $541,808 (U.S.) in comparison with a loss of $179,155 (U.S.) the previous year. EBITDA (earnings before interest, taxes, depreciation and amortization) for the year was recorded at $1,213,806 (U.S.) or approximately $1,557,269 (Canadian).
The corporation is extremely pleased with the promising results, which demonstrate a clear increase in demand for its calcine product, which is expected to remain throughout the current fiscal year ending Oct. 31, 2018.
Christopher Way, chief executive officer, stated: "The annual results reflect a significant turnaround in comparison to a depressed previous year, and position the company well for the current year, during which we plan to complete our broad-based black empowerment program, further improve on making efficiencies in the business, and also looking at potential investment opportunities in southern Africa."
For more details and discussion on the results, the financial statements and management discussion and analysis can be viewed on SEDAR or on the company's website.
About Canaf Group Inc.
Canaf is a public company listed on the TSX Venture Exchange. Canaf's head office is 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.
CAF made $190K net income in Q4 except there was a $244K tax expense for the year, plus $40K bank loan interest. On top of that, CAF was able to pay $300K of the $400K bank loan they had. This was used to buy new equipment in 2014. Impressive that they were able to put down $540K US and pay off $1.15 of the $1.25 million USD borrow(with interest) and not diluting the stock by raising funds. Plus keep in mind that 2015-2016 were not very good years either. This stock deserves much more credit.
November 18, 2014, Vancouver, British Columbia - Canaf Group Inc. (TSXV: CAF) ("Canaf") the Canadaregistered mining group, is pleased to announce agreed terms for the acquisition of a new processing plant worth R20 million (South African Rand) for its South African owned coal beneficiating operation, Quantum Screening and Crushing (Pty) Ltd., (“Quantum”). The new anthracite beneficiating facility, (“Calciner 3”) will be installed and commissioned at its operation near Newcastle, KwaZulu Natal, South Africa. Calciner 3 is being purchased from a South African company specialising in furnace technologies. In May 2014 Quantum ran a successful trial of material through Calciner 3, and as a result Quantum signed a deal earlier this month to acquire the asset, subject to financing. Payment terms for the Acquisition and Loan Facility The value of the acquisition is R20 million (approximately US$1.8million). During November 2014, the Company paid a deposit of R6 million (approximately US$0.54million) from cash and working capital. The balance of the acquisition will be paid by a loan facility of R14million (approximately US$1.25million), which will be provided in payments as and when Quantum requires it, and borrowed over a period of 48 months, however it is the intention of the Company to pay down the loan within 24 months. The loan facility will be provided by Quantum’s existing bank, ABSA Business Bank, South Africa. In addition to the payments for the acquisition, the Company expects to invest approximately R2 million (US$0.18million) in civil and electrical infrastructure for the new facility; this investment will come from working capital. Motivation for New Calciner 3 The purchase of Calciner 3 is not only due to an expected increase in demand for Quantum’s product looking forward to 2015, but the new plant will also be environmentally compliant and significantly more efficient. Increased demand is expected to come from the newly refurbished ArcelorMittal Newcastle steel facility as well as an expected new contract during the course of 2015. Calciner 3 will produce the same product as Quantum’s existing two plants, however, the design is far more environmentally beneficial and does not use electricity as its source of heat. This new, autogenous (selfsustaining) calciner will offer the following benefits to the Company, which include: 1. Reduction of electricity consumption by 95% for each tonne of calcine product produced. 2. Increase of current capacity of Quantum by up to 60%. 3. Significant environmental improvements compared to Quantum’s existing calciners. The Company plans to commission the new facility, Calciner 3, in May 2015. Subsequent to this, the Company plans to then convert Quantum’s existing two calciners to a similar design as Calciner 3; this will be scheduled in a way that will safeguard sales to existing customers and is expected to commence during the fiscal year 2015- 2016.
CAF.V(Canaf Group Inc.) Year End Results. Financials + MD&A Ending October 31st 2017, Released February 23rd 2018 Note – Q1 2018 Results Will Be Released End Of March 2018 All Information Below Can Be Found On SEDAR
LIABILTIES Trade Payables: $757,875 Sales Tax Payable: $32,010 Income Tax Payable: $77,805 Current Portion Of Bank Loan: $310,819 Remaining Bank Loan: $106,063 Deferred Tax Liability: $122,022 Total Liabilities: $1,406,594
G&A Expense: $417,951 Bank Interest: $86,837 Total Expenses: $504,788
Income: $718,322 Interest Income: $17,962 Income Tax Expense: $194,476
Net Income: $541,808 Foreign Currency Loss: $439,664
Converted From USD to CAD $439,664 X 1.25 = $549,580 CAD
Earnings Per Share: $549,580 / 47,426,195 = $0.012 cents
OVERALL PERFORMANCE AND OUTLOOK
The outlook and profitability for the coming year remains strong and the Corporation expects to continue to generate positive free cash flow during the fiscal year-end 2018 and, as it accumulates cash and reduces its gearing and increases its efficiencies, will continue to look at investment in related business opportunities in South Africa; a country which many now regard as one with a very positive outlook for 2018 following its recent change of President.
The fiscal year ended 31 October 2017 saw the Corporation recover from significantly reduced sales between mid-2015 to mid-2016, when depressed global commodity prices affected the Corporation’s customers negatively, which was reflected in one customer closing down for 7 months of the year and another reducing demand by 50%
Revenue for the year ended October 31, 2017 was $10,669,117 (2016 $4,703,528) a $5,965,589 127% increase, and the Corporation returned to profitability with net comprehensive income for year ended October 31, 2017 of $439,664 (2016 net comprehensive loss $162,065) a $601,729 favourable variance. The results reflect the previously reported turnaround from increased demand with sales remaining strong.
During 2016, the Corporation commissioned a new, and more efficient, calcining facility, which began to produce saleable product during Q2, 2016. The new facility reduced operating costs and improved margins and profits as demand also increased. Management believes it is in a stronger position with Quantum being one of a few suppliers of a low volatile reductant, a situation, which has allowed the Corporation to emerge as a dominant player in South Africa
Operations generated $587,509 in cash during the year ended October 31, 2017 (2016 used $11,722) as the Corporation recovered from 8 months of depressed sales and demand for their product, which started in Q3, 2015.
The bank loan bears interest at 10.25% per annum, matures on January 7, 2019, and is secured by the Company’s furnace acquired with the proceeds from the loan. The bank loan is repayable in blended monthly payments of Rand 391,624 ($27,690 translated at October 31, 2017 exchange rate). During the year ended October 31, 2017, the Company incurred interest expense totaling $86,837 (2016 – $71,721).
UPDATE ON UGANDAN CLAIM AGAINST KILEMBE MINES LIMITED
In August 2006, Canaf, then known as Uganda Gold Mining, announced the termination of any further investment into its Kilembe Copper-Cobalt Project in Uganda. Since 2007, the Corporation has been engaged in an Arbitration with Kilembe Mines Limited, (“KML”), whereby the Corporation seeks general damages, special damages and costs of the Arbitration from KML for breach of contract.
The legal work, carried out my MMAKS Advocates, Kampala, against KML is at no cost to the Corporation, but any award in favor of the Corporation will be distributed to both MMAKS and Canaf. Despite the fact that the claim against KML Corporation remains active, the Corporation is unable to give an indication of either the quantum or any likely date by which the Arbitration will be concluded.
Notes 1) 2008: The company wrote off it's Uganda investment, taking a major asset hit 2) 2012: Drop in revenue was caused by A) Customer Issues 2) SA National Strikes 3) Rand Devaluation 3) 2013: Certain write downs and one main customer down for 4 months reduced net income 4) 2015: Production issues, strong USD and weaker Rand. CAF bank loan dropped stock price 5) 2016: Sales down from new plant being installed. Q4 2016 marked turnaround 6) 2017: Losses from 2015-2016 recovered, strongest asset/debt ratio in a decade 6a) Rand & Coking Coal prices at multi year high. Bank debt nearly paid off. Stock price still inexpensive
Here are some recent articles over the last two weeks in regards to Anthracite Coal.
1) http://triblive.com/state/pennsylvania/13369159-74/coal-production-seesawing Note: The United States is the second largest coal producer in the world and Anthracite barely makes up any of it's production. Key Lines: Weekly anthracite production fell by about 2,000 tons to 38,000 tons and is about 11.1 percent behind the 2017 year-to-date total. National coal production in 2018 is about 6.8 percent behind 2017 production.
2) https://www.workboat.com/blogs/maritime-matters/can-coal-exports-fill-void/ Key lines: A curious example is the shipment of 700,000 tons of steam coal from Pennsylvania and West Virginia to Ukraine to displace Russian coal imports. Half of the tonnage, 350,000, will be anthracite coal that originated in central Pennsylvania in the heart of old hard coal country. There is some optimism in the coal sector that increased exports will take up some of the slack from the domestic markets. However, as long as the U.S. is a swing export coal supplier, expect the continuation of the ups and downs in the export market characterized by relatively short-term contracts and small volumes cited in the aforementioned deals.Until the U.S. can be a low cost producer and shipper, export coal will not become a sustaining sector to supplement the permanent loss of domestic coal.
5) https://economics.unian.info/10013294-reuters-how-a-u-s-coal-deal-warmed-ukraine -s-ties-with-trump.html Key Lines: Along with South Africa, Ukrainian-owned mines in Russia have been the main source of anthracite imports but this is fraught with uncertainty. In the past Moscow has cut off gas supplies to the country over disputes with Kyiv, while the Ukrainian government considered forbidding anthracite imports from Russia in 2017 although no ban has yet been imposed. Overall anthracite imports shot up to 3.05 million tonnes in the first 11 months of 2017 from just 0.05 million in all of 2013 - the year before the rebellion erupted.
Multi year high hit today and we got Q1 2018 results coming out in two weeks or less.
Lots of volume today and very little cheap stock if left to buy as we wait for Q1 2018 results to come out next week. Company will keep adding positive cash flow as coking coal supply is diminishing around the world. Major players like BHP, Teck, Acertol, are all having production issues and demand for steel is increasing.