031110 A new study has found that SA coal reserves have been significantly downsized since 2003.photo by Simphiwe Mbokazi 453 031110 A new study has found that SA coal reserves have been significantly downsized since 2003.photo by Simphiwe Mbokazi 453
Coal of Africa (CZA) has entered into definitive agreements with Rothe Investment, a newly established company owned by BEE companies Terracotta Processing and Vibrant Veterans Minerals Resources and King Makhado Holdings, a company representing all the local communities in close proximity to the Chapufi project, to acquire a 26% shareholding in the wholly-owned CoAL subsidiary, Keynote Trading & Investment 108.
Keynote was expected to hold the Chapudi Coal Project and related exploration properties situated in Limpopo, upon completion of its acquisition from Rio Tinto Minerals Development Limited and Kwezi Mining.
Terracotta and Vibrant Veterans each owned 30% of the entire issued share capital of Rothe with the remaining 40% being held by King Makhado, CoAL said on Monday.
In line with CoAL's strategy, the transaction with Rothe had been aligned with the requirements of the Mining Charter and the Minerals Resource and Petroleum Development Act, to ensure that participation through a wider grouping of stakeholders in terms of the principles of broad-based BEE was achieved and that historically disadvantaged South Africans held 26% of the issued shares in Keynote, which was a legislated requirement for 2014.
“The conclusion of this transaction at an operational level ensures closer alignment with important stakeholders, including the communities that live in the immediate proximity of the project area, and avoids any dilution typical of a BEE shareholding held at the parent company level,” CoAl said.
“We are very pleased to have made further progress towards the development of our asset portfolio in the Limpopo region. We recognise that the development of our projects needs to generate real and meaningful benefits for the local communities, the local economy and socio-economic transformation in general,” CoAl's CEO John Wallington added.
“We are delighted to be working with Coal of Africa in the Limpopo Province and look forward to developing our project whilst being mindful of our commitment to environmental and resource stewardship, economic and social responsibilities and, more importantly, that we mine with the consent of the public and the communities in which we will be operating,” Mashudu Ramano, speaking on behalf of Rothe, said.
On 26 November 2010, CoAL confirmed the conclusion of a sale and purchase agreement for the acquisition of the Chapudi Coal Project from joint venture companies held by the vendors for US$75 million.
At the time of entering into the sale and purchase agreement, CoAL confirmed that it intended to use the acquisition to continue and further build upon its broad based BEE partnerships at the operational level.
Specifically, CoAL noted that it planned to develop the Chapudi Coal Project and potential independent power producer arrangements in collaboration with its proposed BEE partners, the local constituents of the communities, together with Terracotta and Vibrant Veterans.
Completion of the Chapudi Coal Project acquisition remained subject to the fulfilment of the conditions precedent by 30 April 2012, including section 11 approval of the transfer in terms of the MPRDA and South African Reserve Bank exchange control approval for, inter alia, payment of the purchase price, CoAl said.
The application for the section 11 approval was required to be supplemented by Keynote's BEE credentials which could now occur following the signature of the agreements with Rothe.
CoAl has entered into a subscription agreement with Rothe and Keynote pursuant to which Rothe and the Company would subscribe for shares in Keynote such that following implementation thereof, Rothe would hold 26% of the ordinary shares in Keynote. The subscription was at par value as Keynote did not currently hold the Chapudi Coal Project.
CoAl, Keynote and Rothe have also entered into a shareholders agreement to regulate their relationship.
CoAL bears the funding risk for the acquisition of the Chapudi Coal Project from the vendors for US$75 million and the initial costs up to bankable feasibility study on the Chapudi Coal Project. Such funding would be advanced by CoAL on an interest free basis for an initial three year period.
Thereafter, this amount bore interest at the publicly quoted prime rate of interest levied by the Standard Bank from time to time. Any other amounts loaned to Keynote by CoAl for other projects undertaken by Keynote, would be interest bearing.
Upon successful completion of the bankable feasibility study, Rothe would undertake to fund its pro rata portion of the funding costs and acquisition cost of US$75 million (such portion being twenty six percent thereof) at its face value from CoAL and would be required to arrange financing for its pro-rata portion of the Chapudi Coal Project, post bankable feasibility, either through equity or debt (which would be on a project basis with CoAL). - I-Net Bridge