The loan will be used to advance the operations and implementation of the Makhado coal project – triple-listed Coal of Africa’s flagship project.
Baobab Mining and Exploration is a subsidiary of Coal of Africa and the owner of the mining rights for the Makhado coal project, in terms of which the IDC shall advance loan funding up to R240 million to Baobab Mining and Exploration for use at the Makhado project.
[quote]The IDC will advance to Baobab Mining and Exploration in two equal tranches of R120 million upon written request from the company. Subject to the provisions of the loan agreement Coal of Africa shall stand as surety for Baobab Mining and Exploration’s obligations to make payment of the required amount in instances in which Baobab Mining and Exploration defaults on such payments.
Upon each advance date, Baobab Mining and Exploration shall be required to, issue new ordinary shares in the company to the IDC which shall be equivalent to 5% of the entire issued share capital of Baobab at such time; and such Coal of Africa’s shareholding in Baobab Mining and Exploration will be diluted accordingly.
Notwithstanding such dilution, Coal of Africa will retain a majority shareholding in Baobab Mining and Exploration.
“Whilst final agreements have now been executed, the transaction with the IDC was initially agreed in December 2016, and is reflective of the company’s position at that time,” comments David Brown, CEO of Coal of Africa.
“The funding of pre-project activities at Makhado is welcomed as we progress the project towards a construction start subject to regulatory and funding requirements.
“We continue to focus on the upliftment and dismissal of the appeal against the integrated water use licence and securing the remaining surface rights of the project.
“This is a defining step towards the bringing the project to reality. We welcome the IDC as a supportive shareholder in the Makhado project who will work with us to promote future success.”
Feature image credit: Coal of Africa
(Coal samples being examined at the Makhado coal project)