South Africa – Coal of Africa Limited (CoAL) has reached an agreement with Rio Tinto Minerals Development and Rio’s joint venture partner Kwezi Mining regarding the deferred consideration payable by CoAL’s subsidiary, MbeuYashu, in connection with its acquisition of the Chapudi coal assets, part of the Greater Soutpansberg project.
In 2010, CoAL acquired the Chapudi coal assets in South Africa’s Soutpansberg coalfield, adjacent to its Makhado project in Limpopo, for US$75 million, of which $30 million was subject to a deferred consideration agreement.
To date, CoAL has settled an additional $8 million of the deferred consideration and the amendment agreement as announced on Tuesday, outlines the agreed repayment terms for the remaining $22 million.
Under the revised agreement, CoAL has agreed to minimum monthly payments of $100 000, with the full and final settlement of the outstanding purchase price plus all accrued interest – of 4% per annum – to be settled on June 15, 2017.
“This was the last of the historic liability issues and this agreement provides certainty of outcome as well as providing CoAL with flexibility, CEO David Brown said in the announcement.
He went on to say that “certain mandatory payments have been stipulated in the agreement and these are linked to the completion of the third stage of the communicated equity raise, which is the completion of the sale of Mooiplaats and the disposal of other non-core assets.”
CoAL has granted security in the form of a first ranking pledge over the shares held by CoAL in MbeuYashu, the holding company of Chapudi and Kwezi.