IchorCoal has announced it has entered a binding agreement to obtain Continental Coal’s interests in the Penumbra and Vlakvarkfontein coal mines in South Africa. The transaction will be funded through a combination of internal funds and third party funding.
The company is set to pay ZAR55 million for 100% interest in Penumbra, which has 14 million t of coal onsite and has produced 500 000 tpa since 2012.In this acquisition, the company will also obtain a rail siding and an annual export allocation of 18 000 t at Richards Bay coal terminal.
The company will pay a further ZAR 73 million for Continental Coal’s 50% shareholding in Ntshovelo, which owns Vlakwarkfontein opencast mine. This mine produces approximately 1.2 million tpa of thermal coal.
Nonkululeko Nyembezi-Heita, CEO of IchorCoal said: "The transaction is another step toward IchorCoal becoming a leading mid-tier thermal coal producer in South Africa. Particularly noteworthy is the proximity of Penumbra to our current operation at Vunene and the potential to extract material synergies, which will result in numerous benefits including the lowering of the overall operating cost. Further, our existing, indirect, shareholding in Vlakvarkfontein makes us the logical acquirer of this asset and clearly demonstrates IchorCoal’s strategy to actively participate in the consolidation of the South African junior coal sector.”
IchorCoal want to participate meaningfully in the South African coal sector and it believes the transaction will provide immediate benefits to its current operations and asset base, such as growing its operational flexibility, increasing its attributable mineable resource base of 449 million t to 460 million t and increasing its immediate access to attributable runoff mine operation by 50%.
The transaction is subject to the fulfilment of various standard conditions precedent such as requisite regulatory approvals from competition authorities and the department of mineral resources. The Ntshovelo transaction is also subject to the existing shareholder not exercising its pre-emptive rights.
Edited from Press Release by Harleigh Hobbs
Read the article online at: https://www.worldcoal.com/coal/11062015/ichorcoal-announce-final-agreements-for-two-south-african-coal-mines-2405/