Johannesburg - Coal of Africa (CoAL) will receive an equity injection of $14.7 million - or about R186 million - as well as a $10 million, or R127 million, loan from a Singapore-based investor.
In a statement to shareholders this morning, the company says it received these boosts from Yishun Brightrise Investment, which is registered in Singapore and is a private investment company with a focus on mineral investments.
Yishun has interests in coal and nickel in both China and Indonesia and is, through this deal, expanding its investment into Africa.
CoAL says the equity investment will be used to finance pre-construction costs at the Makhado coking and thermal coal project as well as for general working capital.
The listed miner recently said the 26-month construction phase of its Makhado colliery would begin in the first half of next year with a further four-month ramp-up phase that will see it finally produce 5.5 million tons a year.
CoAL is an emerging South African focused coal producer, which trades shares in London, Johannesburg and Australia.
Its key assets include the Limpopo-based Vele and Makhado projects, which produce thermal and coking coal. It also operates the Greater Soutpansberg project.
The company secured a new order mining right for Makhado in May, which saw its share soar on the JSE
Under the subscription agreement, Yishun will acquire 9.5% of CoAL’s issued share capital, as long as shareholders approve the deal within the next 60 days.
In addition, Yishun is also keen to acquire a strategic interest in the Makhado Project and the parties are set to begin talks around this “in due course”. This deal is likely to include an equity investment in the Makhado Project, the provision of a shareholder loan on commercial terms providing the debt required for the development of the colliery and, the award of the Makhado Project engineering, procurement and construction contract on commercial terms.
Yishun has also entered into a loan agreement with CoAL that will see it lend CoAL as much as $10 million without interest on condition that Yishun can buy into the listed miner.
CoAL CEO David Brown says “Yishun’s investment in CoAL, combined with the $10 million loan to the company represents a significant step forward in the process to identify a strategic partner for our flagship Makhado hard coking and thermal coal project”.
Shareholders will be updated as matters progress.
IOL