Comdek shares steady after coal acquisition

Shares in West Perth-based Comdek Ltd were the most traded on the Australian Securities Exchange yesterday, after the former telecommunications company announced a deal to gain access to a South African coal resource.

The company will fully acquire Isicebi Carbon Mining Pty Ltd, which has the right to earn a 70 per cent stake in three coal projects.

Comdek shares worth $6.7 million, or 99.54 million shares, changed hands - closing down 0.7 cents at 5.8 cents yesterday - trading at the same price at 11:00 today.

The edited text of a Comdek announcement is pasted below

The directors of Comdek Limited (Comdek or the Company) are pleased to announce the Company has signed an agreement to acquire 100% of Isicebi Carbon Mining (Pty) Ltd (Isicebi), a South African company that has the right to earn a 70% interest in three coal projects located in the Waterberg region of South Africa.

3. Summary of Transaction

Comdek has reached agreement to acquire all the shares of Isicebi Carbon Mining (Pty) Ltd ("Isicebi") a South African registered company, that has signed a Joint Venture agreement with Lukale Mining Company (Pty) Ltd ("Lukale") and Umnotho We Sizwe Group (Pty) Ltd ("Umnotho"), to acquire an interest in, and to farm in to three coal licences held by Lukale located in South Africa, (the "Projects"). Under the terms of the Joint Venture agreement Isicebi is to:

• Pay Lukale US$80,000 in cash;
• Procure the issue of Comdek shares to the value of US$240,000, based on Comdek 5 day VWAP prior to 3 August 2007, being approximately 10,545,222 shares;
• Acquire a 20% interest in the projects for consideration of US$1,365,000 to be satisfied by the issue of Comdek shares based on a 5 day VWAP prior to 29 October 2007, being a total of 37,557,143 shares.
• Commit to US$5 million in exploration expenditure over 3 years to earn a further 50% (for a total of 70%) interest in the Projects, with a minimum expenditure of US$500,000 within the first 12 months.
• Pay Lukale a royalty of 1.30 Rand per tonne of coal sold from the properties In consideration for the acquisition of Isicebi:
• Comdek will buy all the stock of Isicebi for 75 million Comdek shares and 37.5 million options to acquire Comdek shares (5 year expiry, 5 cent exercise price).
• Stock is proposed to be issued in two equal tranches - the first on completion of the transaction and the second on completion of a positive scoping study within six months of completion of the agreement.
• Comdek will reimburse Isicebi US$50,000 in expenditure to date.

The Company will also issue 10 million options exercisable at 5.0 cents each to parties who have advised on the transaction.

The agreements are conditional on Comdek and Lukale completing due diligence and obtaining regulatory and shareholder approval within 120 days of executing the agreements.

4 Proposed Work Programme

Following the acquisition of Isicebi, Comdek will commence exploration on the Projects with a view to determining the extent of coal mineralisation and whether this may lead to a commercial coal mining operation.

Initial phase exploration expenditure will focus on upgrading and extending the existing inferred Resource and completing a scoping study into the potential for development of the coal deposits.

At this juncture the Company will consider whether it is appropriate to make a change to the nature of its activities to a mining exploration company. In the event that the Company does change the nature of its activities, it will seek the approval of shareholders at the appropriate time, issue a prospectus and attend to the various other compliance requirements under chapters 1 and 2 of the ASX Listing Rules.

5. Placement and Capital Structure

Comdek Limited intends to carry out a capital raising of approximately $2.0 million upon conclusion of the acquisition. Further details of the terms and conditions of the capital raising will be announced at that time.

It is intended that the Company will apply these funds towards the exploration of the above coal projects, Cameroon uranium exploration tenements as well as towards the continued expansion of the existing Fusion Communication Services Business and the working capital and administrative requirements of the Company.

The Expected Capital structure of the Company upon completion of the acquisition is included at Appendix A.