ASX-listed, South African coal miner Universal Coal’s major shareholder IchorCoal N.V. has revealed it will make an unsolicited bid for the company.

In acknowledgement of the announcement, the directors who are independent of the offer will meet as soon as reasonably practicable to fully consider the details of the proposed offer.

IchorCoal, which already owns 29.9% of Universal Coal’s issued shares, proposes to offer 16 cents for each ordinary share of the company that it does not already own, valuing Universal Coal at approximately A$81 million.

On 17 August 2015, IchorCoal increased its shareholding to 29.9% from 18.51%.

Universal Coal's Kangala thermal coal mine about 65km east of Johannesburg, in the Witbank coalfields, in Mpumalanga
Universal Coal’s Kangala thermal coal mine about 65km east of Johannesburg, in the Witbank coalfields, in Mpumalanga

In the meantime, the independent directors of Universal Coal recommend that shareholders do not take any action or make any decision in relation to their shareholding until the independent directors have had an opportunity to fully consider the proposed offer and provide a formal response.

Chairman, John Hopkins, (who is independent of the offer) comments: “Despite weak market conditions, Universal Coal is achieving record production and sales, and delivering strong cash flow.  The company is on the cusp of bringing its next operation on stream, which it expects will double the group’s production to in excess of 5 Mtpa within 18 months.”

Ultimately, shareholders will have to decide whether they, or IchorCoal, will benefit from the company’s development pipeline of metallurgical and coal assets, on-going strong cash flow and considerable growth potential.

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