Western Australian-headquartered South African focused resources company Golden Valley Mines Ltd today announced the successful completion of the acquisition of a new coal property in South Africa.
The company announced to the market that it was in negotiations for a substantial open cut coal deposit in the Limpopo province, in South Africa's north, on April 20.
The Limpopo area is seen by many as the new coal province of South Africa and GVM plans to become a major participant of that development.
The prospecting right acquired through the transaction consists of the adjacent Semple, Over Vlatke, Bergen Op Zoom, and Voorspoed farms, and covers an area of 8,662 hectares.
The market has reacted positively to speculation over a possible acquisition, with GVM's market capitalisation rising by around $5.1 million since March 28, to $14.1 million at 1230 AWST today.
GVM will issue 20.8 million shares to acquire a 74 per cent interest in the coal permits. This will result in the total number of GVM shares on offer increasing to 52.1 million.
The acquisition is subject to consent of the South African Minister of Mines and shareholder approval.
The project lies 50 kms north of Rio Tinto's billion-plus tonne Chapudi Coal project, and Rio has announced it is in discussions to supply coal to a new power station at Limpopo.
The ability for GVM to sell its output from the deposit to a nearby power station will substantially improve the economics of the project.
Demand for both coking and steaming coal has increased considerably and the export markets for coking coal remains strong.
