Gold miner Village acquires Continental Coal shares
Gold miner Village Main Reef has entered into a private placement agreement with Aim- and ASX-listed thermal coal company Continental Coal, which will see Village subscribing for 100-million ordinary shares in Continental for A$0.08 a share.
The agreement was subject to shareholder approval being obtained at the ASX-listed coal company’s general meeting on March 28, as well as approval from the South African Reserve Bank.
If approved, the transformational 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, thus 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.
Continental Coal said in a statement last week that the transaction further positioned the company to advance its discussions on a strategic partnership and offtake funding agreement for the De Wittekrans coal project – its proposed fourth mine development.
The deal would further enable the company to progress its other corporate transactional, growth and consolidation opportunities in South Africa, it added.
“The introduction of such a strategic and cornerstone investor to our share register demon- strates the value proposition of our operating coal-mining business and our coal project devel- opment opportunities,” said Continental CEO Don Turvey, who added that the private placement and purchase of small shareholdings would have a significant impact on the company’s business in the short term.
Village joint CEO Marius Saaiman said he believed Continental was at an “inflection point” in terms of its development, having demonstrated its ability to develop and operate mines while offering a strong portfolio of projects.
The thermal coal producer’s portfolio of projects was located in South Africa’s major coalfields and included three operating mines – the Vlakvarkfontein, Ferreira and Penumbra coal mines.
Continental had further concluded strategic offtake and funding agreements with energy trader EDF Trading for its export thermal coal production, signed a joint development agreement with the Korea Resources Corporation and secured debt funding from Absa Capital to fund its growth.
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