Johannesburg, South Africa — MININGREVIEW.COM — 30 November 2010 – COAL of Africa (CoAL) has agreed to buy the Chapudi coal exploration project in Limpopo from joint venture partners Rio Tinto and Kwezi Mining for a total of US$75 million (R535 million).
Revealing this in a statement issued here, CoAL said these coal assets comprised both thermal and coking coal development projects. They would add an estimated 1 040Mt of resources to the group’s coal asset base. They are also contiguous to the group’s Makhado coking coal project.
Based on the Australasian JORC code, Chapudi’s base consists of 90Mt measured, 220Mt indicated, as well as 730Mt inferred resources.
“The acquisition of Chapudi and the related exploration properties bolsters our existing coking coal projects, with Chapudi doubling our Makhado project’s 947Mt resource," said CEO John Wallington.
“The acquisition also comes at a critical time, with the results from Makhado’s definitive feasibility study due in early 2011. We believe that the acquisition will strengthen our application for new order mining rights for Makhado,” he added.
CoAL will pay US$45 million (R315 million) in cash upfront on completion of the sale, which is expected to happen within six months. It has already paid a US$2 million (R14 million) cash deposit. The company will also pay a US$30 million (R210 million) deferred cash consideration, payable on the earlier of the granting of a new order mining right for any farms that form part of the assets, or 24 months from fulfillment of the conditions precedent to the sale.