[miningmx.com] – CONTINENTAL Coal said it had received a R876m ($75m) bid for its 74%-owned South African subsidiary, Continental Coal SA, a firm that has thermal coal production of about 2.2 million tonnes a year.
Continental Coal ran into financial problems just under a year ago after its newly commissioned Penumbra project failed to fully commission on time. Company management was replaced by former director Peter Landau, an Australian entrepreneur who promised to recapitalise the company and find a new buyer.
The R876m bid is from Ivory Mint Corporation, a business registered in the United Kingdom, and which had previously invested in Strategic Natural Resources, an AIM-listed company that owned the Elitheni coal mine in the Eastern Cape province.
The offer from Ivory Mint trumps or replaces an earlier $65m offer by a little-known private equity company, LSP Energy.
According to Continental Coal, proof of funds had been provided by Ivory Mint Corp. with a final sign-off on the arrangement due by January 15. Entire deal completion had been penciled in for end-February, said Landau.
The deal includes settlement of funds owing to South Africa’s Absa Bank, and EDF which agreed to defer revenue from Continental Coal’s assets. Absa, which had agreed in September 2011 to provide Continental Coal $65m (R760m) in finance, told Miningmx in November that it had applied for business rescue proceedings at Continental Coal in order to protect the debt it supplied.
Continental Coal SA owns the Vlakvarkfontein and Penumbra coal mines in South Africa’s Mpumalanga province which produced 539,000 tonnes of coal – a decline of 3.8% year-on-year, but which nonetheless featured a tripling in production from Penumbra which produced 143,000 tonnes in the period. There is no updated production data for subsequent periods.
Landau added that Ivory Mint had subscribed for 400 million shares in Continental Coal, half of the total new shares issued to shareholders in terms of a long-standing rights issue aimed at keeping the company liquid.
All in all the rights issue raised A$4m before costs which is way below the A$35m Continental Coal initially hoped it might raise.
