Toronto, Canada — 26 September 2012 – Canadian-based and TSX-listed Forbes & Manhattan Coal is buying global diversified miner Rio Tinto’s 74% majority stake in Zululand Anthracite Colliery (ZAC) for an estimated R440 million.
In a statement issued here the company revealed that Rio Tinto’s 74% stake in Riversdale Anthracite Colliery, an undeveloped anthracite resource, was also included in the transaction. The balance of the shareholding in the two assets was held by black economic empowerment partners.
Forbes Coal will as a result acquire Riverdale’s 74% interest in the Zululand Anthracite Colliery, a current producing anthracite mine, and Riversdale’s 74% interest in the Riversdale Anthracite Colliery, an undeveloped anthracite resource, the statement added. Both properties were located in the Kwa-Zulu Natal province of South Africa and are located about 230km from Forbes Coal’s Aviemore operations.
The base consideration payable by Forbes Coal for the transaction was estimated to be R440 million, via a structured deal with a fixed payment of R 315 million payable on closing, and two additional variable payments each estimated to be R 62.5 million.
The statement explained that the first variable payment would be based on saleable production levels for the 12 months ending on 30 June 2013, and the second would be based on saleable production levels for the 12 months ending 30 June 2014.
In addition to these payments, Forbes Coal would also pay an annual revenue share of 10% on incremental revenue above R850 million, to be adjusted for CPI, until 30 June 2025.
The company revealed that the ZAC asset was thought to be one of last, large-scale producers of high-quality anthracite product in South Africa. It operated a rail siding 10km from the plant it owned and operated, and it had 150,000tpa of Quattro allocation at Richard’s Bay Coal Terminal.
Source: Forbes & Manhattan Coal. For more information, click here.