Coal of Africa Limited (CoAL) shares went up by as much as 17% on Tuesday after it released a SENS announcement explaining an amendment agreement had been signed with Rio Tinto Minerals Development (Rio Tinto) and Kwezi Mining Proprietary (Kwezi) over the details of a ‘deferred consideration’ for the acquisition of the Chapudi Coal assets.
The amount owed by CoAL’s subsidiary, MbeuYashu Proprietary, was for the acquisition of Chapudi Coal assets, owned by Chapudi Coal (Chapudi) and Kwezi Mining and Exploration (KME), which form part of the Greater Soutpansberg Project.
Chapudi and KME hold the prospecting rights for the Chapudi Coal Project and related exploration properties in South Africa’s Soutpansberg coalfield in the province of Limpopo.
The full acquisition price was $75 million of which $30 million was subject to a deferred consideration agreement. CoAL had settled an additional US$8 million of the deferred consideration and this new amendment agreement outlines the agreed repayment terms for the remaining US$22 million.
Other relevant features of the agreement included that there would be minimum monthly payments of US$100 000 and that a full and final settlement of the outstanding purchase price plus all accrued interest would be due on June 15, 2017.
David Brown, CEO of CoAL, said this was the last of the historic liability issues concerning the agreement and provided certainty around conditions of payment. “I would like to thank all parties for their co-operation in realising a solution,” he said.