MCM.L Regulatory News (MCM)

7 May 2008 07:00

Coal of Africa Limited07 May 2008 ANNOUNCEMENT 7 MAY 2008 COAL OF AFRICA LIMITED SALE OF HOLFONTEIN COAL PROJECT FOR A$25m Coal of Africa Limited ("CoAL") (ticker "CZA"), the AIM/ASX/JSE listed coaldevelopment company operating in South Africa, is pleased to announce that ithas reached agreement with Lachlan Star Limited ("Lachlan Star") whereby LachlanStar will acquire 100% of the Holfontein Coal Project ("Project") in SouthAfrica. Total consideration for the Project is A$25 million, payable in a mix ofcash and shares and staged at key milestones. The transaction also includes an option agreement covering the adjoiningWildebeestfontein Farm. Transaction Summary The proposed transaction will include an upfront payment upon transfer of theProject and a series of milestone payments related to the granting of a NewOrder Mining Right ("NOMR") for the Project and certain production targets. Thepayment terms are as follows: • A payment of A$15 million, with minimum cash consideration of A$9million upon transfer of the Project tenements to Lachlan Star's nominatedsubsidiary; • A cash payment of A$1 million and a share payment of A$2 million (tobe priced at Lachlan Star's 30 day VWAP prior to payment) upon grant of theNOMR; • A cash payment of A$2 million and a share payment of A$3 million (tobe priced at Lachan Star's 30 day VWAP prior to payment) upon the production ofan aggregate of 500,000 tonnes of saleable coal; and • A cash payment of A$1 million and a share payment of A$1 million (tobe priced at Lachlan Star's 30 day VWAP prior to payment) upon the production ofan aggregate of 1,500,000 tonnes of saleable coal. The transaction is conditional upon: • Approval from all relevant regulatory bodies in South Africa for thetransfer of title in the Project to Lachlan Star's nominated subsidiary; • Assignment of CoAL's rights under the Wildebeestfontein Agreementdated 3 December 2007 to Lachlan Star; • Approval by Lachlan Star's shareholders of the transaction; and • Legal due diligence. Following the conclusion of the sale, CoAL will be the largest shareholder inLachlan Star. A further detailed announcement will be made by the Company upon satisfaction ofthe applicable conditions. Managing Director of CoAL, Simon Farrell, commented 'We are pleased to reachthis agreement with Lachlan Star for the sale of the Holfontein Coal Project.This agreement allows CoAL to concentrate on our larger Mooiplaats and Limpopocoal projects, while taking an interest in Lachlan Star Limited.' SIMON J FARRELL Managing Director For more information contact:Simon Farrell, Managing Director GVM +61 417 985 383 or +61 8 9322 6776Petronella Gorrie The Event Shop +27 82 827 8815Jos Simson/ Leesa Peters Conduit PR +44(0) 20 7429 6603Olly Cairns / Romil Patel Blue Oar Securities Plc +61 8 6430 1631 +44(0) 20 7448 4400 www.coalofafrica.com About CoAL:Coal of Africa Limited ("CoAL"), formerly GVM Metals Limited, is primarily focused on the acquisition, exploration and development of thermal and metallurgical coal projects. The Company's key projects, along with its leading metals processing company NiMag Group (Pty) Ltd are in South Africa. The Company was incorporated in Western Australia and listed in 1980. Since 2005, the Company has also listed on both the AIM and JSE markets, allowing further growth in the Company's coal assets. This information is provided by RNS The company news service from the London Stock Exchange