MC Mining’s subsidiary, Baobab Mining & Exploration has reached agreement on the terms and conditions under which it will acquire the two key properties required for its
Makhado hard coking and thermal coal project, in Limpopo.
Baobab will buy the Lukin and Salaita properties for R70-million.
As previously stated the company has been pursuing various avenues, including
legal and negotiations on commercial terms with the owner of the properties, a privately owned company that uses the properties for commercial hunting purposes.
The purchase price will be settled in two equal tranches of R35-million, with the properties pledged as security until the purchase price is settled.
The initial tranche is payable on transfer of the properties, while Baobab will have access to the properties upon payment of this amount to the conveyancing attorneys. It will be funded from internal cash flows.
The second tranche will accrue interest at the South African prime interest rate (currently 10%) less 3%, from the date of transfer.
It is payable on the earlier of the third anniversary of the transfer of the properties; or the first anniversary of production of coal underlying the properties; or completion of a potential land claims and expropriation process that would, in all likelihood, result in Baobab receiving market related compensation under present legislation.
Should the properties be expropriated in favour of land claimants, MC Mining will negotiate access terms with the relevant authorities and the successful claimants, who are expected to be communities who have a shareholding in Baobab.
“The agreement to acquire Lukin and Salaita is a significant step for MC Mining and completes the suite of surface rights required for our permitted flagship Makhado project,” MC Mining CEO David Brown commented in a statement published on Thursday.
With the acquisition, the company can proceed with the geotechnical and related studies for the mine’s infrastructure.
MC Mining has made considerable progress on Makhado milestones, including an offtake agreement for about half of the hard coking coal to be produced at the mine.
Negotiations for the sale of the remaining hard coking coal, as well as the thermal coal are at an advanced stage while funding initiatives are also progressing.