JOHANNESBURG (miningweekly.com) – JSE-listed diversified mining company Village Main Reef has, following approval by shareholders of ASX-listed Continental Coal, purchased 100-million shares in the South African thermal coal production, development and exploration company for A$0.08 a share.
Shareholder approval was received at a Continental Coal general meeting on Thursday.
Continental would now proceed to complete the allotment and issue of the shares, upon receiving approval from the South African Reserve Bank, which is anticipated in April.
The placement to Village – at a premium to Continental’s last traded share price on the ASX and a 30% premium based on the company's 90-day share price, was part of a broader strategic financing transaction between the two miners.
In addition to the A$8-million private placement transaction, the transformative deal would also give Village the option to acquire further Continental shares on the market at a price of up to A$0.10 a share, increasing its shareholding to 19.9%.
This would be achieved through the acquisition of shareholdings from shareholders that owned shares with a market value of less than A$500.
The transaction reflected Village’s continued diversification strategy, while maintaining its investment in cash-generating assets.
Village would also be invited to appoint a representative to the board of Continental Coal as part of the broader strategic relationship.
The funds raised from the private placement were to be used by the coal company to reduce debt, meet working capital requirements and strengthen its balance sheet.