COAL of Africa (CoAL) ticked up 1.75 percent in intraday trade on the JSE yesterday on news that it received approval for the first tranche of a $64.9 million (R720m) injection into the firm.

The emerging coal developer has an agreement with three investors – Haohua Energy International Resources (HEI), TMM Holdings and the Investec Asset Management (IAM) – to raise the money through the issue of 695 million shares at an issue price of £0.055 (R0.97) a share. CoAL has been raising funds by selling non-core assets and has sold the Mooiplaats Colliery to Blackspear Capital.

CoAL said yesterday that Hong Kong-based HEI had been granted regulatory approval by the Chinese government for the first tranche of $23.4m.

CoAL would now apply to issue 251 million ordinary shares as part of the first stage of its the private placement by Monday on the JSE, Australian Stock Exchange and the Alternative Investment Market.

“The stage 1 placement of shares will be fully paid ordinary shares in the capital of CoAL and rank equally in all respects with the existing fully paid ordinary shares on issue,” it said.

The second stage of the equity raise of $41.5m was conditional to TMM having obtained sufficient funds to purchase its second-stage placement shares.

Following stage 1 and 2 of the share placement, the TMM will own 12.33 percent share, IAM will own 8.14 percent and HEI will own 26.53 percent.

If the equity raise is successful this will fund modifications to the plant at the Vele Colliery and restart the colliery.

The mining company is awaiting regulatory approvals and the completion of front-end engineering design.

It would also settle the Investec Bank working capital facility.

It also aimed at funding the company’s expected working capital requirements for the next 18 months.

CoAL said the approval of its Mooiplaats disposal to Blackspear Capital was subject to the completion of the technical due diligence and final board approval, which was expected by the end of the month.

“Following the receipt of the final regulatory approvals consistent with a transaction of this nature, CoAL expects financial close of the transaction by the end February 2015.

David Brown, the chief executive of CoAL, said the firm was confident it would complete raising equity, as well as the successful sale of Mooiplaats.

“These transactions will place the company in a position to conclude on all outstanding legacy issues and commence project development.”

The share price yesterday closed up 1.75 percent to R0.58. – Dineo Faku