JOHANNESBURG (miningweekly.com) – Coal of Africa Limited (CoAL) has resolved its last historic liability issue as a deal is reached between it, Rio Tinto Minerals Development and Rio’s joint venture partner Kwezi Mining, over a deferred consideration payable by CoAL subsidiary MbeuYashu for a 2010 acquisition.
Late in 2010, CoAL entered into a $75-million agreement to buy the Chapudi coal assets, adjacent to its Makhado project in Limpopo, from Rio Tinto and Kwezi, with $45-million paid upfront in cash, and the balance of $30-million deferred until the sale had been completed in 2012.
To date, CoAL had settled around $8-million of the deferred consideration, with the newly amended agreement announced on Tuesday outlining the repayment terms for the remaining $22-million.
“This agreement provides certainty of outcome, as well as providing CoAL with flexibility,” CEO David Brown said in an update to shareholders on Tuesday.
Under the revised agreement, CoAL had agreed to a minimum monthly payment of $100 000 and a full and final settlement of the outstanding purchase price, plus all accrued interest – at 4% a year – on June 17, 2017.
“Certain mandatory payments have been stipulated in the agreement, and these are linked to the completion of the third stage of the communicated equity raise, the completion of the sale of Mooiplaats and the disposal of other noncore assets,” Brown explained.
Stage 3, which was implemented in April, would see CoAL issue an additional 144-million shares to raise gross proceeds of £7.92-million as part of its overall capital raising process to raise gross proceeds of £38.23-million by the end of May.
Further, the company was in the process of selling its 74%-owned Mooiplaats colliery, in Ermelo, Mpumalanga, to Blackspear Capital, through a $23.47-million sales and purchase agreement.
The group was also in the process of offloading the Woestalleen colliery, near Ermelo, the Mpumalanga-based Opgoedenhoop mining right, coal explorer Lemur Resources and the Holfontein project, in the Witbank coalfield.
Meanwhile, CoAL granted security in the form of a first ranking pledge over the 74% in shares CoAL held in MbeuYashu, the holding company of Chapudi and KME.