MCM.L Regulatory News (MCM)

21 Apr 2008 07:01

Coal of Africa Limited21 April 2008 Coal of Africa Limited ('CoAL' or 'the Company') PLACEMENT AND OFF-TAKE AGREEMENT REACHED WITH WORLD'S LARGEST STEEL COMPANY Coal of Africa Limited, the AIM/ASX/JSE listed coal development companyoperating in South Africa, is pleased to announce that it has reached agreementwith ArcelorMittal (NYSE: MT), the world's largest and most global steelcompany, whereby: 1. ArcelorMittal will subscribe for up to 60 million new ordinary shares @£1.11 per share ("the Placement"), raising £66.7 million and representingapproximately 16 per cent of CoAL's issued capital as enlarged by the issue ofsuch shares ("Placement Shares"); 2. ArcelorMittal will enter into an off-take agreement with CoAL to securea minimum 2.5 million tonnes per annum of coking coal from CoAL's 100 per centowned Baobab and 74 per cent owned Thuli Coal Projects in the Limpopo Provinceof South Africa. ArcelorMittal also has an option to increase its coal off-taketo 5 million tonnes per annum; and 3. ArcelorMittal will have the right to nominate one person to beappointed as a director of the Company following completion of the first trancheof the Placement as described below. The Placement Shares are to be placed pursuant to the authority to issue sharesrecently granted by shareholders at a General Meeting held on 8 April 2008 andwill be issued in two tranches. The first tranche will comprise such number ofshares that, when aggregated with ArcelorMittal's existing shareholding in CoAL,will result in a holding of 14.9% of the issued capital of the Company ("FirstTranche"). The balance ("Second Tranche"), or such lower number that ensuresArcelorMittal's holding in CoAL does not exceed 20% of the enlarged issuedcapital, will be issued upon the Australian Foreign Investment Review Board'sapproval being obtained. Further announcements of the completion of the First Tranche and the SecondTranche will be made in due course. Terms and conditions of the off-take agreement are subject to final negotiationsand formal documentation, however in principle it has been agreed that the coalwill be delivered to the town of Musina in the Limpopo province, at aFree-on-Rail ("FOR") price linked to the Free-on-Board ("FOB") price of Kestrelhard coking coal sold by Rio Tinto and reported by Wood Mackenzie, assumingsimilar quality and specification parameters. ArcelorMittal employs over 310,000 personnel in more than 60 countries and in2007 announced revenues of USD 105.2 billion, with a crude steel production of116 million tonnes, representing around 10 per cent of world steel output. Managing Director of CoAL, Simon Farrell, commenting on the agreement stated, "This is the most significant event in CoAL's short history operating within thecoal industry. We are very glad to welcome ArcelorMittal as a significantshareholder and first customer which reinforces CoAL's status as an emergingmid-tier coal producer." Executive Vice President, Sudhir Maheshwari of ArcelorMittal said "Thisinvestment reinforces ArcelorMittal's strategy of vertical integration into rawmaterials and further strengthening our commitment to South Africa." For more information contact:Simon Farrell, Managing Director CZA +61 417 985 383 or +61 8 9322 6776Olly Cairns / Romil Patel Blue Oar Securities Plc +61 8 6430 1631 or +44(0) 20 7448 4400Jos Simson/ Leesa Peters Conduit PR +44(0) 20 7429 6603Petronella Gorrie The Event Shop +27 82 827 8815 About CoAL: Coal of Africa Limited ("CoAL") is primarily focused on the acquisition,exploration and development of thermal and metallurgical coal projects. TheCompany's key projects, along with its leading metals processing company NiMagGroup (Pty) Ltd are in South Africa. The Company was incorporated in WesternAustralia and listed in 1980. Since 2005, the Company has also listed on boththe AIM and JSE markets, allowing further growth in the Company's coal assets. About ArcelorMittal ArcelorMittal is the world's largest and most global steel company, with 310,000employees in more than 60 countries. The company brings together the world'snumber one and number two steel companies, Arcelor and Mittal Steel. ArcelorMittal is the leader in all major global markets, including automotive,construction, household appliances and packaging, with leading R&D andtechnology, as well as sizeable captive supplies of raw materials andoutstanding distribution networks. An industrial presence in 28 European, Asian,African and American countries exposes the company to all the key steel markets,from emerging to mature, positions it will be looking to develop in thehigh-growth Chinese and Indian markets. ArcelorMittal key financials for 2007 show revenues of USD 105.2 billion, with acrude steel production of 116 million tonnes, representing around 10 per cent ofworld steel output. ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT),Paris ( MTP), Brussels (MTBL), Luxembourg (MT) and on the Spanish stockexchanges of Barcelona, Bilbao, Madrid and Valencia (MTS). This information is provided by RNS The company news service from the London Stock Exchange