15 August 2011, Vancouver, British Columbia-Canaf Group Inc. (TSXV: CAF) ("Canaf" or the "Company") announces that ArcelorMittal South Africa has confirmed that a structural failure occurred in the gas cleaning plant at its Newcastle facility on Friday 5 August 2011.
The damage has rendered their blast furnace inoperable and repairs are expected to be completed in approximately three months.
As a consequence of the incident, Canaf's wholly owned subsidiary, Quantum Screening and Crushing (Pty) Ltd., ("Quantum"), has been advised by ArcelorMittal that no supply of calcined anthracite for their Newcastle facility will be required until further notice. ArcelorMittal's plant at Vanderbijlpark is expected to continue ordering calcined anthracite as usual.
In response to the news, Quantum's management team made a precautionary decision to stop production and cease the majority of supplies from the Company's feedstock supplier, Shanduka Coal, as a case of force majeure. Christopher Way, President and CEO stated today, "The news from Mittal is very disappointing, especially at a time when we have been experiencing record orders from our largest customer, however, I am confident that Quantum will continue to be profitable during the coming two to three months; revenue will be reduced but we can expect to see increased margins as we sell our stocks."
Quantum has built up sufficient stocks of calcine and cash over the past quarters and will manage to continue to supply other customers without operating the kilns for a short period of time. Christopher Way also stated, "We will maintain close contact with Mittal's Newcastle facility so that we are ready to start up production approximately 4 to 6 weeks prior to their re-commissioning, in order to re-build stocks. In the meantime, Quantum will be actively looking for other customers, as part of our ongoing expansion plan."
This incident will not affect the financials of the last quarter for the period 01 May 2011 to 31 July 2011, which are expected to be released towards the end of September 2011. Reduced revenues are expected for the months from September through to December 2011. Shareholders will be kept informed of any further impact once more information has been received from ArcelorMittal.
Canaf Group Inc. is a junior mining group based in Vancouver, Canada, and with subsidiary offices in the United Kingdom. Canaf owns 100% of Quantum Screening and Crushing (Pty) Ltd., a carbon producing company based in South Africa.
Quantum Screening and Crushing (Pty) Ltd's is one of South Africa's largest producers of calcined anthracite, a product used as a replacement to coke in the manufacturing process of steel and manganese. The company's two largest clients are Mittal Steel and Samancor, world leaders in steel and manganese production respectively. Quantum has an operation in Newcastle, KwaZulu Natal, where its two kilns operate around the clock devolatising the raw material, anthracite. The majority of Quantum's feedstock anthracite is supplied by Springlake Colliery, which has reserves in excess of 25 years and is located in the nearby town of Dundee.
Certain information regarding Canaf contained herein may constitute forward looking statements. Forward looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Although Canaf believes that the expectations reflected in such forward looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. These statements are subject to certain risks and uncertainties and may be based on assumptions that could cause actual results to differ materially from those anticipated or implied in the forward looking statements. Canaf undertakes no obligation to update publicly or revise any forward looking information, whether as a result of new information, future events or otherwise, except as required by law.These risks include operational, marketing, political, currency and geological risks and the ability of Canaf to raise or obtain funds for its operations. Canaf's forward-looking statements are expressly qualified in their entirety by this cautionary statement.
For further information on Canaf Group, visit www.canafgroup.com or see contacts below.
Canaf Group Inc.
Phone: +44 1273 492100
Fax: +44 1273 492175
The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
You can view the Next News Releases item: September 15, 2011, Canaf Announces Consolidated Q3 Financials
You can view the Previous News Releases item: July 22, 2011, Canaf negotiates lower debenture and unsecured loan interest rates and commissions new screening and crushing plant
You can return to the main News Releases page, or press the Back button on your browser.