Perth, Australia — MININGREVIEW.COM — 18 February, 2008 – Coal of Africa Limited – a company primarily focused on the acquisition, exploration and development of thermal and metallurgical coal projects in South Africa – has reached agreement to acquire 100% of the Mooiplaats coal project, which is situated 2 km from the recently re-commissioned Camden power station, near Ermelo in the Mpumalanga province of South Africa.
CoAL – formerly GVM Metals Limited – was incorporated in Western Australia, and is listed on the Australian stock exchange, the JSE and the AIM.
An announcement here today confirms that the company has received consent from the Deputy Director General: Mineral Regulation of the Department of Minerals and Energy to complete its acquisition of 70% of the issued capital of the South African company that owns Mooiplaats. CoAL will now make the final £10 million (R150 million) cash payment and issue the remaining 4.44 million shares in the company to take its interest to 70%.
The announcement adds that CoAL has also reached agreement to acquire the remaining 30% interest, taking its interest in Mooiplaats to 100% upon completion.
Total consideration payable for the 30% acquisition has been agreed at R130 million in cash, together with 4.75 million shares in CoAL. Based on the current share price and foreign exchange rates, this equates to £8.65 million (R130 million). Settlement of both transactions, except the issue of the 4.75 million shares – which is still subject to shareholder approval – is expected within the next two weeks.
CoAL managing director Simon Farrell described this development as a significant milestone, crystallising the company’s control in bringing Mooiplaats into production. “Together with the agreement to take our interest to 100%, this clearly provides maximum upside and reward to the company’s shareholders at time when spot coal prices continue to trade at record levels,” he said.
CoAL currently has four coal projects in various stages of exploration, as well as Nimag, the company’s interim cash producing asset which manufactures nickel magnesium alloys.
An interim resource statement on Mooiplaats issued by SRK Consultants has confirmed an inferred resource of 240 million tonnes, containing a measured resource of 43 million tonnes. A final report is expected towards the end of November.
Drilling programmes to date have covered only a third of the total holdings, and Phase 3 of the drilling on the remainder of the property is scheduled to commence later in 2008. The goal of the drilling programme is to delineate a resource sufficient in size to supply the adjacent Camden power station’s coal requirement of 6 million tonnes per annum for at least 10 years.