ANNOUNCEMENT 10 May 2012
Acquisition of Rio Tinto and Kwezi's South African coal assets completed
"Transaction strengthens Coal of Africa's position as one of the most substantial holders of prospecting and mining rights for coking coal in South Africa's Soutpansberg coalfield," says CEO John Wallington.
Coal of Africa Limited ("CoAL" or "the Company"), the coal exploration, development and mining company operating in South Africa, is pleased to advise that the consents, required under the Section 11 of the Mineral and Petroleum Resources Development Act ("Section 11 consents"), have been granted by the Minister of Mineral Resources in respect of the sale of shares by Rio Tinto Minerals Development Limited ("RTMD") and Kwezi Mining (Proprietary) Limited (collectively "the Vendors") in both Chapudi Coal (Proprietary) Limited ("Chapudi") and Kwezi Mining and Exploration (Proprietary) Limited ("KME") to Keynote Trading & Investment 108 Proprietary Limited ("Keynote"). Keynote is a subsidiary of the Company, with a recently constituted Board of Directors and Rothe Investments as the 26% Black Economic Empowerment ("BEE") shareholder. Chapudi and KME hold the prospecting rights for the Chapudi Coal Project and related exploration properties in South Africa's Soutpansberg coalfield in the Limpopo Province, (collectively, the "Chapudi Coal Assets"). The Section 11 consents relate to the transfer of an interest or control in a mining or prospecting licence holder.
Coal of Africa CEO John Wallington commented that, "The granting of the Section 11 consents by the Minister concludes the regulatory steps to complete the acquisition of the Chapudi Coal Assets, strengthening Coal of Africa's position as one of the most substantial holders of prospecting and mining rights for coking coal in the region. The transaction provides significant scale and optionality in the planning of future mining projects, and will enable the consolidation of several contiguous tenements in the Soutpansberg coalfield. The detailed planning and technical work required as part of this process has commenced with our partners, while the reserve and resource calculations of these newly-acquired coal assets are being evaluated and a further update will be issued to the market in due course."
Mashudu Ramano, Chairman of Rothe Investments noted that, "We will seek to develop these assets responsibly, and in the interests of all stakeholders. The consolidation of the various tenements will provide further long-term potential for the economic development of this region. Communities in close proximity to Chapudi hold a 40% interest in Rothe, the structure of which will be finalised in consultation with the relevant communities, making this a truly broad-based BEE project."
As advised in the report for the quarter ended 31 March 2012, and released on 30 April 2012, the original share purchase agreement ("the Original SPA") was amended to allow for the sale of equity and the sale of shareholders' claims to close separately (the "Amended SPA"). This amendment facilitated the application by the vendors for South African Reserve Bank ("SARB") exchange control approval for separate payment in respect of the sale of the equity and shareholder claims. In anticipation of a longer period to obtain approval for the settlement of the shareholder loans, the priority for the Vendors, the Company and Keynote was to close the equity sale.
In line with the Amended SPA, the date for the fulfilment of the conditions precedent for the sale of the equity was extended from 30 April 2012 to 31 May 2012. The date for the fulfilment of the conditions precedent for the sale of the shareholder claims was extended from 30 June 2012 to 31 July 2012. The purchase consideration remains US$75 million in aggregate, of which a $2 million deposit has been paid. SARB exchange control approval for the sale of the equity was received in early April 2012 and having satisfied the remaining conditions precedent, final closing of the transaction is expected to occur on 11 May 2012 following settlement of the first tranche of the purchase consideration due under the terms of the Amended SPA.
On closing, Keynote will take ownership of the equity and pay the first tranche of the purchase consideration of US$29,357,545 to the Vendors. Upon granting of exchange control approval by the SARB in respect of the shareholder claims, the remaining amount due under the first tranche of US$13,642,455 is payable by the Company to RTMD. The second tranche of $30 million will become payable either on the receipt of a New Order Mining Right ("NOMR") on any of the properties that form part of the prospecting area in any of the New Order Prospecting Rights ("NOPRs"), or two years from the date upon which the conditions precedent are fulfilled, whichever transpires earlier.
For more information contact:
John Wallington Chief Executive Officer Coal of Africa +27 11 575 4363
Wayne Koonin Financial Director Coal of Africa +27 11 575 4363
Shannon Coates Company Secretary Coal of Africa +61 89 322 6776
Sakhile Ndlovu Investor Relations Coal of Africa +27 11 575 6858
Reuben Govender JSE Sponsor J.P. Morgan Equities Limited +27 11 507 0430
Charmane Russell/Jane Kamau Financial PR (South Africa) Russell & Associates +27 11 880 3924/
+27 82 372 5816
Jos Simson/Emily Fenton Financial PR (United Kingdom) Tavistock +44 20 7920 3150
Chris Sim/Jeremy Ellis/Neil Elliot Nominated Adviser Evolution Securities +44 20 7071 4300
CoAL is an AIM/ASX/JSE listed coal exploration, development and mining company operating in South Africa. CoAL's key projects include the Vele Colliery (coking and thermal coal), the Makhado Project (coking coal) and the Mooiplaats and Woestalleen Collieries (both thermal coal).
The Mooiplaats Colliery commenced production in 2008 and is currently ramping up to produce 2 Mtpa. The Woestalleen Colliery, acquired through the acquisition of NuCoal Mining (Pty) Limited in January 2010, currently processes approximately 2.5Mtpa of saleable coal for domestic and export markets. The Woestalleen Complex also incorporates three beneficiation plants with a total processing capacity of 350,000 run-of-mine (ROM) feed tonnes per month.
CoAL's Vele Colliery started commercial production in Q1 2012. During the initial phase, the operation is targeting 2.7 Mtpa ROM production to produce 1.0Mtpa of saleable coking coal. The Makhado Project, CoAL's flagship project in the Soutpansberg coalfield, is well into the feasibility stage, with a Definitive Feasibility Study having been reviewed by the CoAL Board in March 2012. An application for a New Order Mining Right for the Makhado Project was submitted in January 2011.
In November 2010, CoAL agreed to acquire the Chapudi coal project and several other coal exploration properties in the Soutpansberg coal basin in South Africa from the previous owners, including Rio Tinto. The acquisition of the Chapudi Coal Assets strengthens Coal of Africa's position as one of the most substantial holders of prospecting and mining rights for coking coal in South Africa's Soutpansberg coalfield.
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