PERTH (miningweekly.com) – The share price of ASX-listed junior Coal Fe Resources doubled on Wednesday on news that the company would acquire significant shareholdings in iron-ore and coal projects, in Indonesia.

The company told shareholders that it had entered into a conditional agreement to acquire a 65% stake in the owner of an operating iron-ore mine, which produces about 30 000 t/m of ore.

The company would acquire a stake in the iron-ore project through Indonesian company PT Mineral Sukses Makmur for $6.5-million in cash, payable in three tranches. The first $1-million is payable upon shareholder approval and the transfer of shares, with the balance of the payments to be staged.

Coal Fe said that it would aim to double production at the mine to about 60 000 t/m.

Meanwhile, the ASX-listed junior has also entered into a conditional agreement to acquire a 70% shareholding in the owner of a high-calorie operating anthracite mine, with a historic production of about 30 000 t/m, in exchange for $250 000.

The project was currently not being mined, as owner PT Tunggal Putra Nusantara had insufficient working capital to maintain ongoing operations.

Coal Fe said that it was in negotiations with a number of offtake partners for the coal from the mine. The company hoped to restart operations within two to six months of shareholder approval, and the operation was expected to produce at a rate of 500 000 t/y.

“Coal Fe has a track record of developing and commercialising mines in Indonesia. These projects will simply fast-track that process and provide shareholders with access to already producing or historically producing projects that have low capital expenditure but provide good operating margins, resulting in significant cash flows for shareholders,” said MD Robert Swarbrick.

Meanwhile, Coal Fe on Wednesday also announced that it would look to raise about A$500 000 in capital, issuing 50-million shares, at a price of A$0.01 a share, to sophisticated investors.

Swarbrick said that the raising would assist the company in funding the proposed transactions.

Coal Fe was also in discussions with several parties regarding the future funding and deferred payments of the projects, which would likely be sourced from the anticipated returns to shareholders generated by product sales from the mines.

Both transactions were subject to a due diligence study and approval from shareholders and regulators.

Coal Fe shares changed hands at A$0.10 a share when the market closed on Wednesday afternoon, up 100% on the previous days' closing price of A$0.05 a share. The stock fetched a high of A$0.12 earlier in the day.