Thermal coal producer Continental Coal has announced that the settlement of the sale of its shareholding in Vanadium and Magnetite Exploration and Development (VanMag) has been completed.The company confirmed that total sale proceeds of about US$10 million (R90.72 million) from the off sale of its shareholding in VanMag will be used by Continental Coal (ContiCoal) towards purchasing all outstanding minority interests in coal miner Mashala Resources. Mashala Resources has steam coal operations in Mpumalanga Penumbra coal mine, which has about 10 Mt of saleable coal; the De Wittekrans coal mine, which produces about 250 Mt of coal and in KwaZulu-Natal-based Geluk anthracite mine producing about 10 000 Mt a month. Following the acquisition of the outstanding interests in Mashala Resources, which is scheduled to be completed by the end of March 2013, ContiCoal will hold 100% interest in the operating Ferreira coal mine and Penumbra coal mine. Both these mining operations produce a high-quality thermal coal that is exported through the Richards Bay Coal Terminal and sold under existing offtake agreements into the Asian markets. In addition, ContiCoal will hold 100% interest in the De Wittekrans coal project that is forecast to become the companys fourth coal mine, and where the company is in advanced negotiations in respect to a potential long-term offtake agreement, strategic partnership and stand-alone funding agreement for its development.
“To be able to conclude the sale of one of the companys non-core assets and use the proceeds towards the finalisation of acquiring the outstanding minority interests in Mashala is a significant positive for the company and its thermal coal business in South Africa,”ContiCoal‘s CEO Don Turvey said.“We have, over the past three years, invested heavily in establishing a South African thermal coal production, development and export business that includes the Vlakvarkfontein and Ferreira coal mines and now following the commencement of mining activities at the Penumbra coal mine, we anticipate increased returns for our shareholders in the coming years,” he added. With settlement of the sale of the companys interest in VanMag and the process towards acquiring the remaining minority interests in Mashala under way, the company said that it looks forward to further finalising its advanced negotiations with parties regarding the acquisition of an interest in its South African coal mining business and/or, for the acquisition and/or joint venture of specific operating and development projects. However, ContiCoal pointed out that while these negotiations are at an advanced stage, they remain confidential and incomplete and there is no guarantee that a transaction will be completed to the satisfaction of the company.