Continental acquires South African miner

Continental Coal has announced a US$35 million deal to acquire a majority stake in South African coal company Mashala Resources.

The company's South African subsidiary has entered into a binding heads of agreement to acquire 100 per cent of Mashala Resources shares.

"The acquisition adds extensive mine infrastructure, immediate export sales and provides one existing and five future mining operations to Continental's existing project portfolio," Continental's chief executive officer Don Turvey said.

Continental will fund the deal through a placement to institutional and sophisticated investors to raise A$22 million.

Continental will also issue a convertible note to Asian and European financial institutions to raise A$25million.

Finally it will introduce an underwritten share purchase plan to raise A$11 million.

The acquisition provides Continental will immediate export coal production from the Ferreira open cast mine which exported approx. 600,000 tonnes in the 2009 financial year.