Great Deal11 May 2016 09:59
HI Razorman
The Chinese are apparently banging the door down to get in on the action here.. watch for a rerating....
Shenzen Stock Exchange-listed Hengshun may invest in its Makhado project and its buyout offer for Universal Coal had reached an acceptance level of 93.2%.
The coal mine developer said in a quarterly report remaining cash at the end of March was $27.1m.
Hengshun proposes to acquire up to 34% of Makhado via CoAL’s subsidiary Baobab for about $114m
The final transaction valuation would be subject to both parties’ negotiation, a valuation report issued by an internationally reputable accounting firm and the conclusion of a formal subscription and sale agreement between both parties.
"The memorandum of understanding with Hengshun is an important milestone in the identification of a strategic investor for the development of the company’s flagship Makhado coking coal project," CEO David Brown said in Friday’s statement.
"Hengshun has commenced its due diligence on Makhado and has also expressed its interest to acquire a stake in the project and provide facilitated debt.
"Lastly, I’m pleased to report that CoAL has now received 93.2% acceptances from its shareholders for the potential acquisition of Universal Coal. Importantly, the acquisition will transform the CoAL into a cash generative mid-tier South African coal producer."
A setback during the quarter was the suspension of the integrated water use licence for the Makhado Project, granted in January, following an appeal by the Vhembe Mineral Resources Forum to the Department of Water and Sanitation.
Makhado’s 26-month construction phase is expected to begin as soon as all regulatory approvals are in place, which is expected to be before July next year.
A design of the mine underway by international engineering group DRA is scheduled for completion next month.
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