Johannesburg, South Africa — MININGREVIEW.COM — 25 June 2010 – Australian-based junior Riversdale Mining has lined up two major Chinese backers for the Zambeze coal project “’ which has a resource of 9 billion tonnes and is the company’s second proposed coal venture in Mozambique.
Riversdale is carrying out a feasibility study to expand the proposed mine at its Benga project on the Moatize coal field to a run-of-mine (ROM) production capacity of 20 million tonnes per year.
The company has already started construction of the first phase at Benga. It should be completed by the second half of 2011 and will produce 5.3Mtpa of ROM coal.
Riversdale’s partner in the Benga project is Indian steel and manufacturing group Tata Steel, which holds a 35% stake.
Miningmx reports that Riversdale has now signed a non-binding memorandum of understanding with Wuhan Iron and Steel Corporation (Wisco) and a logistics partnership agreement with China Communications Construction Company (CCCC) over the Zambeze project, which is adjacent to Benga.
The memorandum of understanding provides for Wisco to take a 40% stake in the Zambeze coal project for payments totalling US$800 million (R6 billion). These will be made in three tranches, subject to the achievement of certain milestones.
Wisco will also be issued 8% of the ordinary equity in Riversdale on signing of the definitive agreements at an agreed price of A$10 a share. The memorandum of understanding calls for completion and signing of the definitive agreements within 120 days.
Wisco will earn the right to buy at least 40% of the coking coal produced from Zambeze, as well as the right to buy at least 10% of the coking coal from Benga, in both cases on market terms.
According to Riversdale chairman Michael O’Keeffe, the memorandum of understanding also covers the facilitation by Wisco, along with CCCC and other Chinese companies, of a comprehensive study of “mine-to-ship logistics” to enable the export of large tonnages of coal from Zambeze.