Universal Coal Plc has announced the acquisition of 100% of the shares and claims in Manyeka Coal Mines (Manyeka). Manyeka owns 51% of the Eloff Mining Co. Ltd (EMC), the 100% owner of the Eloff coal project (Eloff), in South Africa.
Universal Coal Development IV (Pty) Ltd (UCDIV), a joint venture between Universal (49%) and Ndalamo Resources Ltd (51%) concluded the acquisition of Manyeka. UCDIV already owns a 29% stake in EMC, which was acquired for cash in June 2017, bringing UCDIV’s total shareholding in EMC to 80%.
UCDIV is also the 100% beneficial owner of the New Clydesdale Colliery (NCC).
Manyeka was purchased from Exxaro Coal Central (Exxaro) and is subject to conditions precedent typical for a transaction of this nature, including Ministerial Approval in terms of Section 11 of the Mineral and Petroleum Resources Development Act (MPRDA). It is anticipated that settlement of the acquisition price of AUS$8.46 million (ZAR 90 million), will be funded through internally generated cashflows from the NCC. Since July 2017, NCC has been fully operational and has been delivering positive cashflows and EBITDA since August 2017.
EMC has two prospecting rights covering an area of 8168 ha that is currently subject to a Mining Right application. In addition to the Mineral Rights, EMC owns the surface rights to 6146.7 ha of the project area. These surface rights cover most, if not all, of the areas identified for expansion at the Kangala coal mine.
EMC is adjacent to the Kangala coal mine, which allows Universal the opportunity to consolidate the contiguous resource base of the Eloff project with Universal’s existing Kangala coal mine, and provides optionality for extension of Kangala’s life of mine.
Commenting on the investment in Eloff, Universal’s CEO Tony Weber said: "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 cashflows 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 cashflows allowing additional savings within the project to materialise.
“Universal has declared its maiden dividend following the FY2017 results, and remains committed to creating wealth for our shareholders by means of delivering sustained organic growth and through continued dividend distributions,” Weber concluded.
Read the article online at: https://www.worldcoal.com/mining/27112017/universal-acquires-additional-51-stake-in-eloff-project/
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