Coal of Africa Limited Deferred Consideration amendment agreement signed (1241X)
May 04 2016 - 2:00AM
UK Regulatory
TIDMCZA
RNS Number : 1241X
Coal of Africa Limited
04 May 2016
ANNOUNCEMENT 4 May 2016
Soutpansberg Deferred Consideration amendment agreement
signed
Coal of Africa Limited (the "Company" or "CoAL") is pleased to
announce that it has successfully concluded the mediation process
and reached an agreement (the "Amendment Agreement") with Rio Tinto
Minerals Development Limited ("Rio Tinto") and Kwezi Mining
Proprietary Limited ("Kwezi", together with Rio Tinto, "the
Sellers") regarding the deferred consideration payable by CoAL's
subsidiary, MbeuYashu Proprietary Limited ("MbeuYashu"), to the
Sellers in connection with its acquisition of the Chapudi Coal
assets (part of the Greater Soutpansberg Project, "GSP
Project").
During 2012, CoAL acquired the shares and shareholders claims
held by the Sellers in both Chapudi Coal Proprietary Limited
("Chapudi") and Kwezi Mining and Exploration Proprietary Limited
("KME"). Chapudi and KME held the prospecting rights for the GSP
Project and related exploration properties in South Africa's
Soutpansberg coalfield in the province of Limpopo (collectively,
the "Chapudi Coal Assets"). The full acquisition price for the
shares and shareholders claims in Chapudi and KME was US$75 million
of which US$30 million was to be settled by way of deferred
consideration payments. To date, CoAL has settled approximately
US$11.2 million of the deferred consideration.
During March 2016, that Company and its subsidiary company,
MbeuYashu received a notice from Rio Tinto and Kwezi declaring the
Deferred Consideration (Announcement 8 March 2016) and ancillary
amounts to be due and payable (the "Allegation"). The Company and
MbeuYashu disputed the Allegation.
In connection with the foregoing dispute, the Parties entered
into a mediation process and as a result, have agreed to settle
their dispute by further amending the terms that regulate the
payment of the Deferred Consideration (plus Accrued Interest and
Costs) still due and owing to the Rio Tinto and Kwezi.
Salient features contained in the Amendment Agreement
include:
-- Amendment of the minimum monthly payments from US$100,000 to US$650,000.
-- US$1,000,000 payable on the 15(th) of May 2016 and
US$2,000,000 payable on the 15(th) of September 2016.
-- Full and final settlement of the outstanding purchase price
plus all accrued interest remains 15 June 2017.
-- Interest accrued on the outstanding balance remains at 4% per annum, and
-- Certain mandatory payments have been stipulated in the
Amendment Agreement, subject to the successful completion of the
sale of assets and of equity not associated with the proposed
Universal Coal Plc transaction
-- The Amendment Agreement allows the Company to pursue its proposed business objectives
Together with the Amendment Agreement, the security documents
entered into with the Sellers pursuant to which CoAL has granted
security in the form of a first ranking pledge over the shares held
by CoAL in MbeuYashu, the holding company of Chapudi and KME. CoAL
is the effective owner of 74% of the shares in Chapudi and KME. To
date, an amount of US$18.8 million remains owing by CoAL to Rio
Tinto and Kwezi.
David Brown, Chief Executive Officer of CoAL, commented: "This
was the last of the historic liability issues and this agreement
provides certainty of outcome as well as providing CoAL with
flexibility. I would like to thank all parties for their
co-operation in realising a solution".
Authorised by
David Brown
Chief Executive Officer
4 May 2016
For more information contact:
Chief Executive +27 10 003
David Brown Officer Coal of Africa 8000
Chief Financial +27 10 003
De Wet Schutte Officer Coal of Africa 8000
+27 10 003
Celeste Riekert Investor Relations Coal of Africa 8000
Endeavour Corporate +61 08 9316
Tony Bevan Company Secretary Services 9100
Company advisors:
Jos Simson/Emily Financial PR +44 20
Fenton (United Kingdom) Tavistock 7920 3150
Matthew Armitt/Ross Nominated Adviser Peel Hunt +44 20
Allister and Broker LLP 7418 8900
Charmane Russell/Olwen Financial PR Russell & +27 11
Auret (South Africa) Associates 880 3924
or
+27 82
372 5816
Investec Bank Limited is the nominated JSE Sponsor
About CoAL:
CoAL is an AIM/ASX/JSE listed coal exploration, development and
mining company operating in South Africa. CoAL's key projects
include the Vele Colliery (coking and thermal coal), the Greater
Soutpansberg Project /MbeuYashu, including CoAL's Makhado Project
(coking and thermal coal).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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