The Universal Coal acquisition gives the company to access to the Eloff project for approximately R43.5 million.
The acquisition of an initial 29% stake in Eloff Mining Company (EMC), a company incorporated in South Africa, has been completed by Universal Coal Development, which is owned by Universal (49%) and Ndalamo Resources (51%).
Universal Coal Development is the 100% beneficial owner of the New Clydesdale Colliery which is concluding the ramp-up phase of its open cut mining operations.
EMC is the holding company for two prospecting rights, covering an area of 8 168 ha, that is currently subject to a mining right application.
In addition to the mineral rights, EMC owns the surface rights to 6 146.7 haof the project area. These surface rights cover most if not all the areas identified for the Kangala expansion.
The acquisition allows Universal Coal the opportunity to consolidate the contiguous resource base of the Eloff project with Universal’s existing Kangala Colliery and provides optionality in extension of Kangala’s life of mine.
The 29% stake in Eloff was acquired from Canyon Springs Investments 80, the purchase price of which has been settled from existing cash reserves, thereby eliminating the need to draw on shareholder equity contributions to fund the acquisition.
Eloff is contiguous to the Kangala opencut mining area, and hosts a SAMREC (South African Code for The Reporting of Exploration Results, Mineral Resources and Mineral Reserves, 2007 edition amended July 2009) compliant coal resource of 424 Mt.
SAMREC is a rigorous code that delivers robust resource and reserve estimates and is a “qualifying foreign estimates” for the purpose of ASX Listing Rules. No major differences in the estimates would be anticipated between SAMREC and JORC 2012 compliance.
Feature image credit: Universal Coal