CoAL in $75m deal for Rio Tinto’s Chapudi

[miningmx.com] — COAL of Africa (CoAL) has agreed to buy the Chapudi coal exploration project in Limpopo from joint venture partners Rio Tinto and Kwezi Mining for $75m (R535m).

These coal assets comprise both thermal and coking coal development projects.

CoAL said the Monday Chapudi will add an estimated 1,040 million tonnes of resources the the group’s coal asset base. It is also contiguous with the group’s Makhado coking coal project.

Based on the Australasian code for reporting of exploration results, minerals resources and ore reserves (Jorc Code), Chapudi’s base consists of 90 million tonnes measured, 220 million tonnes indicated as well as 730 million tonnes inferred resources.

“The acquisition of Chapudi and the related exploration properties bolsters our existing coking coal projects, with Chapudi doubling our Makhado project’s 947 million tonnes resource,” said CEO John Wallington.

“The acquisition also comes at a critical time with the results from Makhado’s definitive feasibility study due early 2011. We believe that the acquisition will strengthen our application for new order mining rights for Makhado.”

CoAL will pay $45m in cash upfront on completion of the sale, which is expected to happen within six months. CoAL has already paid a $2m cash deposit. It will also pay a $30 million deferred cash consideration, payable on the earlier of the granting of a new order mining right for any farms that form part of the assets, or 24 months from fulfillment of the conditions precedent to the sale.

The properties being acquired significantly extend the scale and scope of CoAL’s existing Voorburg and Jutland coal projects, the group said.