JOHANNESBURG (miningweekly.com) – Triple-listed Coal of Africa Limited (CoAL) has entered into subscription and loan agreements with Singapore-registered private investment company Yishun Brightrise Investment PTE, which will see Yishun take a 9.5% equity stake in CoAL for £9.4-million, or about $14.7-million.
Under the subscription agreement, Yishun would acquire about 183.23-million shares in CoAL at 5.15p apiece.
The funds would be used to finance the preconstruction costs at CoAL’s Makhado coking and thermal coal project, in South Africa, as well as for working capital purposes.
The agreement was subject to shareholder approval and CoAL would, within 60 days, hold an extraordinary general meeting to allow shareholders to vote on the deal.
Further, Yishun was also interested in acquiring a strategic interest in the Makhado project, which was wholly owned by CoAL subsidiary Baobab Mining & Exploration.
CoAL intended to, in due course, enter into discussions with the investment company in this regard.
“The package being discussed includes an equity investment in the Makhado project, the provision of a shareholder loan on commercial terms providing the debt required for the development of the colliery and the awarding of the Makhado engineering, procurement and construction (EPC) contract on commercial terms,” CoAL stated.
In connection with these matters, the two companies had also entered into a loan agreement that would see Yishun lend CoAL $10-million, or about £6.4-million, on condition that the coal miner’s shareholders approve the subscription agreement.
The loan would bear no interest and was only repayable if Yishun had not received the subscription shares within 95 days of the signing of the subscription agreement; or if an unrelated third party made an equity investment in the Makhado project before June 30, 2016.
Further, the loan would be repayable if CoAL or Baobab decided not to proceed with the sale of an equity interest in Baobab to Yishun prior to June 30, 2016; if CoAL or Baobab was put into administration prior to June 30, 2016; or if Baobab ceased to be the holder of the new-order mining right for Makhado or if the project was halted as a result of a permanent regulatory prohibition.
The same would apply if the parties did not enter into a Makhado EPC contract on commercial terms; or if they did not enter into an agreement for Yishun to provide a shareholder loan on commercial terms to provide the debt required for the development of the project.
“Yishun’s investment in CoAL, combined with the $10-million loan to the company represents a significant step forward in the process to identify a strategic partner for our flagship Makhado hard coking and thermal coal project.
“The company looks forward to progressing negotiations with Yishun or its related parties to further their potential investment in the project. The CoAL board supports Yishun’s investment and shareholders will be updated as negotiations between the parties progress,” commented CoAL CEO David Brown.