Two Perth-based resource companies have today entered deals to acquire assets in South Africa with Continental Capital acquiring a coal mine for $24 million while Coal of Africa will buy the remaining interest in a coal company.
West Perth-based Continental said it has entered into a deal to acquire the Chelmsford coal asset, which is around four months away from potential first production.
Continental said exploration for coal in the area has been ongoing for over a century by various mining companies but mining ceased in the 1980s when the power station was closed.
"Key features of the proposed operations are low capital expenditure, low stripping ratios, open cut and use of adjacent rail and washing facilities," the company said.
"...[Continental] can commence operations producing both export thermal coal and local power station coal.
It said that under the terms of the acquisition, the company will be able to use cash flow from the Chelmsford operation to finance most of the acquisition cost.
The consideration for the asset is ZAR160 million ($A24 million) which will be made in staged payments.
This is Continental's third coal acquisition in South Africa in as many months.
The company is restructuring itself into a coal business after it acquired a 74 per cent interest in Continental Coal earlier this year.
Meantime, Continental has entered into an agreement, subject to due diligence, to sell its interest in the Vanmag iron ore project in South Africa.
Under the deal, Continental will receive $US10 million in cash plus a $US3 million royalty payment over the life of the mine.
Shares in Continental climbed 0.1 cent to 5.8 cents at 15:29 AEST.
More to come...
