OPTIMUM Coal, which is the target of a takeover bid by multinational commodity trader Glencore, fell 5,4% on Friday after it said production had fallen in the past six months.

Optimum Coal reported export coal fell 20% and coal destined for Eskom was down 11% compared with a year earlier. Optimum Collieries underperformed while the Koornfontein mine was steady.

Mr Mike Teke CEO said that "Generally, our overall production performance for the first half of financial year 2012 was disappointing on the back of production challenges at Optimum Collieries, which adversely affected attributable run of mine tonnage performance and consequent export sales volumes.”

Mr Teke said that "Encouragingly, Transnet Freight Rail’s general industry railings performance to Richards Bay Coal Terminal during the period has substantially improved on prior periods on the back of rolling stock and locomotive upgrades as well as efficiency initiatives.”

"This is extremely encouraging from a coal export and project development perspective."

Glencore and its partners have a beneficial stake of 32% in Optimum, below the 35% level which would trigger an offer to all shareholders.

The group has secured up to a 65% stake in Optimum Coal, having agreed with black economic empowerment groups to buy their stakes. The parties await Competition Commission rulings on several issues. Once these are resolved and Glencore lifts its stake in Optimum it will make an offer for the shares it does not own at not less than ZAR 38 each.

(Sourced from www.businessday.co.za)