Universal subsidiary raises stake in Eloff project to 80%
JOHANNESBURG (miningweekly.com) – A subsidiary of ASX-listed Universal Coal has increased its stake in the Eloff coal project, in Mpumalanga, South Africa, to 80%.
Universal Coal Development IV (UCDIV), which is a joint venture between Universal and Ndalamo Resources, has acquired Manyeka Coal Mines, which owns 51% of the Eloff Mining Company (EMC), from Exxaro Coal Central for about R90-million or A$8.46-million.
The acquisition will be funded through internally generated cash flows from the New Clydesdale Colliery, in which UCDIV owns a 100% interest.
UCDIV already owned a 29% stake in EMC and this transaction will increase its interest to 80%, while Universal's effective shareholding in the project will be 39.2%.
EMC owns two prospecting rights covering 8 168 ha that are currently subject to a mining right application. It also owns the surface rights to 6 146.7 ha of the Eloff project area that cover most of the areas identified for expansion at Universal’s Kangala colliery.
"The increase in shareholding in the Eloff project is a significant transition in production sustainability for the Kangala colliery and the Universal group. The company now has two long-life profitable operations with minimal future capital expansion requirements, and producing solid cash flows for shareholders.
"The Eloff project will require minimal development capital, as the current Kangala infrastructure will be sufficient to support an extension of life. Eloff will be funded from operational cash flows allowing additional savings within the project to materialise," commented Universal CEO Tony Weber.
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