African Energy puts coal asset up for sale

Local junior miner African Energy Resources has entered into an agreement for the potential sale of its Mmamantswe coal project to a South African project developer for up to $US20 million ($A26 million).

Under the terms of the deal, the unnamed developer will be required to form a bid consortium, which will sole fund the submission of a bid into South Africa’s coal-fired base load IPP procurement program, using African Energy’s 1.25 billion tonne coal project.

African Energy will be paid an initial $US10 million if the project bid is shortlisted by South Africa’s Department of Energy, and will transfer share ownership in the project to the developer.

The company will then received a second $US10 million payment if the project reaches financial close.

The Mmamantswe project has an approved environmental impact assessment for up to 10 million tonnes per annum of coal mining and up to 2,000 megawatts of power generation.

“The conditions precedent include completion of due diligence by the buyer within 30 days, delivery of a bank guarantee or the creation of an escrow account for the initial $US10 million payment within 60 days, and completion of a share sale agreement within 60 days,” African Energy said in a statement.

Shares in African Energy were 1.4 per cent higher to 7.2 cents each at 10:20am.