South Africa – Coal of Africa (CoAL) has concluded agreements with broad based black economic empowerment (BBBEE) partners for their 26% acquisition of the Makhado hard coking/ thermal coal project in the Soutpansberg coalfield.
Conclusion of the transaction, which is subject to the conditions set out below, will ensure the Makhado project complies with mining legislation in South Africa and satisfies one of the last remaining requirements for the granting of a New Order Mining Right.
The transaction results in the Makhado Colliery Community Development Trust, representing seven local communities living in the vicinity of the proposed colliery, acquiring 20% of the Makhado project.
The broad base of the Trust’s beneficiaries ensures that the Makhado project will significantly benefit local communities. A further 6% has been acquired by Yoright Investments, a company formed by black entrepreneur Mike Nkuna whose shareholder grouping will include Historically Disadvantaged South Africans and other black entrepreneurs, further expanding the BBBEE shareholding in the project.
“The Makhado colliery will be the first of its type in the Soutpansberg and the company anticipates that the relevant regulatory approvals will be granted in due course.” David Brown
The transaction will result in the Trust owning 20%, Yoright 6% and CoAL 74% of Baobab Mining & Exploration, the entity that will implement the Makhado project. The Transaction is conditional on inter alia Section 11 approval from the Department of Mineral Resources.
The Trust and Yoright have to raise sufficient funding within two years, or such date agreed between the parties. The final amount payable is subject to due diligence and will be negotiated with the company following these processes.
Commenting today CoAL CEO David Brown stated: “The acquisition of 26% of the Makhado project by BBBEE parties is a critical step to obtaining the Makhado project mining right. Furthermore the transaction reaffirms CoAL’s commitment to empowerment and Yoright together with the communities in the vicinity of the project stand to gain significant benefits over the life of the project.”
“The Makhado colliery will be the first of its type in the Soutpansberg and the company anticipates that the relevant regulatory approvals will be granted in due course.”
The Makhado is CoAL’s most advanced feasibility-stage project. The resource will initially be mined on an opencast basis over 16 years with the potential for further expansion into underground. It has a 344.8 Mt mineable tonnes in-situ resource and is expected to product 12.6 Mtpa run of mine (ROM) coal yielding 2.3Mtpa hard coking coal and 3.2Mtpa thermal coal for domestic or export markets.