This is in relation to the agreements under which MbeuYashu, a subsidiary of Coal of Africa, acquired interest in Chapudi Coal and Kwezi Mining Exploration.
“The final repayment and completion of the Rio Tinto Chapudi transaction is a milestone for the company, as it resolves the outstanding legacy issues which have plagued the company for the past five years,” says Coal of Africa CEO, David Brown.
“We continue to focus on developing our flagship Makhado project which will deliver significant value for all our stakeholders.”
In April Coal of Africa has entered into a loan agreement with the Industrial Development Corporation of South Africa (IDC) and Baobab Mining and Exploration.
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.
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.