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FSE - Firestone Energy Limited - Agreement to Acquire Interest in Additional

Release Date: 02/02/2010 08:21
Code(s): FSE
Wrap Text

FSE - Firestone Energy Limited - Agreement to Acquire Interest in Additional Properties from Related Party FIRESTONE ENERGY LIMITED (formerly Centralian Minerals Limited) (Registration number: ABN 058 436 794) (SA company registration number: 200/023973/10 Share code on the JSE: FSE Share code on the ASX: FSE ISIN: AU000000FSE6 ("FSE" or "the Company") Agreement to Acquire Interest in Additional Properties from Related Party Introduction River Group is auhtorised to announce that FSE and Sekoko Resources (Pty) Ltd ("Sekoko") have entered into an agreement in terms whereof FSE, through its wholly owned subsidiary Lexshell, will acquire an interest in the prospecting rights held by Sekoko over the farms Swanepoelpan and Duikerfontein. ("the Transaction"). Sekoko is a major shareholder of FSE and the company`s BEE partner. Description of the Transaction The transaction will take the form of a Joint Venture agreement between Sekoko and Firestone it is expected that substantial additional size and scale will be added to the existing Waterberg project. Significantly, the farms share boundaries along strike West from the farm Smitspan (Refer Plan - Figure 1). Drilling data from 9 exploration holes on these farms indicate that the full sequence of 12 coal zones exists on these farms, 3 holes on farm Swanepoelpan indicate access at shallow depth to coal within 1.5km West of the proposed Smitspan pit. Swanepoelpan shares a common boundary with the farm Smitspan where the FSE/Sekoko joint venture has recently acquired the surface rights and the joint venture is completing a bankable feasibility study for the establishment of an open cast coal mine. Duikerfontein is immediately adjacent to Swanepoelpan. The acquisition of Swanepoelpan and Duikerfontein has the potential of extending both the size and the minelife of the planned Smitspan open cast mine. It could enable the joint venture to realise significant synergies in scale and mine options. John Wallington (Managing Director of Firestone (former Anglo Coal Group CEO)) said, "we are extremely pleased to have the opportunity of acquiring these two strategic farms and we believe by increasing the mineral reserves our ability to offer large sustainable low cost coal supplies to one of the nearby planned power producers has been materially enhanced". Tim Tebeila, (Non-Executive Director of Firestone and Chairman of Sekoko Resources) suggested further that, "this additional transaction makes good economic sense and will further enhance and strengthen the mutual benefits to be derived out of the Joint Ventures between Sekoko and Firestone". It is envisaged FSE acquire a 60% interest in the rights relating to the above two farms, with Sekoko having a 40% interest therein, on terms similar to the second joint venture. In summary FSE will pay Sekoko: - a non-refundable amount of AUS $100,000 immediately; - a further non-refundable payment of AUS $100,000 on or before 1 July 2010; - a cash payment of AUS $1,800,000 on or before 31 July 2011; plus - the issue to Sekoko of 200 million fully paid ordinary additional shares in FSE. Financial Effects The financial effects of this transaction will be published as soon as they are determined after the company has completed its due diligence and valuation exercise as per the conditions precedent. Conditions Precedent The agreement is subject, inter alia, to the approval of FSE shareholders, all regulators, (including the South African Reserve Bank and the JSE) and FSE financiers. The transaction is further subject to Lexshell conducting a valuation and due diligence programme in respect of the two farms. It is expected such approvals will be obtained and the due diligence completed prior to July 2011. Catergorisation This transaction is a related party transaction under the ASX and JSE rules and the company will prepare all the relevant documentation, including a circular to shareholders, and approach shareholders for all the relevant approvals on completion of the due diligence and valuation exercises as per the conditions precedent above. For information please contact: John Wallington Managing Director Telephone: +61 8 9381 2755 Pretoria 2 February 2010 Corporate Adviser and Sponsor River Group Date: 02/02/2010 08:21:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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