Precious metals producer Pan African Resources has announced the completion of the acquisition of Uitkomst colliery.

The colliery has been acquired by Pan African Resources for a revised purchase consideration of R176 million from Oakleaf Investments Holding and Shanduka Resources on 31 March 2016.

“We are pleased to have finalised the transaction and we welcome the Uitkomst colliery employees to the Group, Pan African Resources CEO Cobus Loots commented, adding that the Transaction is expected to be value accretive to the company.

[quote] Pan African Resources assumed control of the Uitkomst colliery on 1 April 2016 following the settling of the revised purchase consideration inclusive of working capital acquired.

Pan African Resources will also be implementing a BEE transaction similar in nature to those currently in place at Pan African’s Barberton and Evander mining operations.

The BEE transaction will result in an additional 9% historically disadvantaged on-mine ownership in the Uitkomst colliery.

This 9% ownership will be held by broad-based trusts and by a strategic entrepreneur’s trust. The BEE transaction will be financed by the Uitkomst colliery on a notional basis, with this notional funding accruing interest linked to the prime interest rate.

The transaction results in limited dilution to Pan African and 80% of dividends issued to the BEE shareholders will be retained to repay the notional funding over a period of 10 years.

Operation overview

Located near Newcastle, in the Utrecht coalfields in KwaZulu Natal, Uitkomste colliery produced 412 000 t of ROM coal at a wash yield of 67.5% for the period 1 July 2015 – 29 February 2016. The mine achieve saleable coal production of 278 000 t for the same period.

The life of mine of the operation is estimated at 28 years while the area also has additional exploration potential.