South African coal mining project rejects bid by Tata Power

Exploration company Firestone Energy has rejected a bid by Tata Power for a 30 per cent stake in a coal project in South Africa,citing a huge undervaluation of the project,a report has said.

Written by Agencies | Johannesburg | Published: April 6, 2012 8:07:45 pm

Exploration company Firestone Energy has rejected a bid by Tata Power for a 30 per cent stake in a coal project in South Africa,citing a huge undervaluation of the project,a report has said.

Tata had offered R480 million for the stake in the Limpopo venture,which is a partnership between Firestone Energy and South Africa-based Sekoko Resources,the report by South African daily Business Day said.

Tata had based its bid on a valuation of R1 billion,while the true value of the asset was R1.6 billion,Sekoko Chairman Tim Tebeilatold the daily.

“I was expecting (Tata Power) to come up with a good value,but it’s not a major setback because we have a good asset,” Tebeila said.

Work on the mine is expected to start in 2012 with a production output of two million tons of coal annually,with a gradual increase to 10 million tons within five years.

In a release Firestone Energy said,”Following consideration of the offer,the board of Firestone has decided to reject the (Tata Power) offer … materially undervalues the value built up in the project to-date.”

The company had received an offer from Tata Power Company Limited to invest in its joint venture with Sekoko Resources to develop a coal mine in the Waterberg area of South Africa,it said.

Queries sent to Tata Power in this regard did not elicit any reaction immediately.

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