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FSE - Firestone Energy Limited - Major shareholder, Sekoko Coal, secures R249

Release Date: 17/12/2010 15:41
Code(s): FSE
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FSE - Firestone Energy Limited - Major shareholder, Sekoko Coal, secures R249 Million funding for Waterberg Coal Project FIRESTONE ENERGY 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") MAJOR SHAREHOLDER, SEKOKO COAL, SECURES R249 MILLION FUNDING FOR WATERBERG COAL PROJECT INTRODUCTION Firestone Energy Limited (ASX / JSE : FSE) has been formally advised by Sekoko Coal (Pty) Ltd (("Sekoko"), the major shareholder (39%)) and BEE joint venture partner of FSE that Sekoko has entered into an agreement with the Industrial Development Corporation of South Africa Limited ("IDC") that will enable Sekoko in partnership with the IDC to fund Sekoko`s future contribution in the development of the Firestone properties resulting in the IDC owning 33.3% of Sekoko`s equity in the Waterberg Coal Joint Venture ("the Project") for ZAR249 million. DETAILS OF THE SEKOKO TRANSACTION Following intensive due diligence process, The Industrial Development Corporation of South Africa (IDC), a developmental finance institution wholly owned by the South African Government, has approved and committed funding support to assist Sekoko to maintain and follow its rights in FSE and the Project. The funding will be made available for the Waterberg mine construction. The funding support will be facilitated by Sekoko transferring its rights and interests in the Project and FSE to a new company (Newco) which will be held by Sekoko (66.7%) and IDC (33.3%). The IDC will contribute up to R204 million for its equity stake and will also make available a R45 million Standby Preference Share Facility. On conversion of the convertible notes by Newco and taking into account the FSE shares it will already own in FSE the IDC`s shareholding in Newco will result in it owning an effective interest of approximately 20% of the Waterberg Project on a see through basis. Sekoko is delighted with this landmark achievement. The finance approval is binding on both Sekoko and IDC. The agreements are currently being drafted for signature early January 2011. ABOUT SEKOKO Sekoko is a black owned and managed mining company with all its prospecting and mining activities based in Limpopo Province in South Africa. Sekoko is a broad based black economic empowerment company with diversified shareholding including communities of Limpopo, black women and historical disadvantaged individuals. Sekoko is excited that IDC is keeping to its mandate of supporting and funding community and historically disadvantaged individuals owned entities located in the rural and outlying areas of the country which might result in stimulating employment and economic growth in these areas. Sekoko initiated and promoted the Waterberg Coal Project since 2005. FSE joined as a partner afterwards and the Definitive Feasibility Study was completed in October 2010 driven mostly by Sekoko Coal. Mr. Tim Tebeila, the executive chairman of Sekoko has reported that they are delighted to have the IDC as a funding partner for their Waterberg Joint Venture project. ABOUT THE IDC The IDC is a self-financing, national Development Finance Institution (DFI) in South Africa. It was established in 1940 to promote economic growth and industrial development in South Africa. IDC`s track record and successes in funding developing mining and energy projects over the last 70 years of its existence speaks for itself. It funded the development of and is currently a sizeable shareholder in most of the top resources companies in South Africa. The list include Sasol Limited, Acelor Mittal South Africa, Exxaro Resources, Kumba Resources, Kalagadi Manganese and Foskor Ltd. The Non Executive Chairman of FSE, Mr John Dreyer, believes this is a very positive step for the coal project whereby Sekoko/IDC can now finance their share of the mine development under the terms and conditions of the Joint Venture agreement. Mr. Dreyer mentioned the necessary changes to the Joint Venture agreement are being drafted and that the IDC deal is subject to the shareholders agreement being signed, when this is completed a further announcement will be then made. In other developments, the discussions on the Eskom offtake agreement are progressing satisfactory and are expected to be concluded shortly. Further information can be obtained by contacting the person below on +61 (08) 9 2874600. John Dreyer Chairman www.firestoneenergy.com.au Johannesburg 17 December 2010 Sponsor and Corporate Advisor River Group About Firestone Energy Firestone Energy is an independent Australian exploration company focused on developing coal projects in South Africa. The company is currently exploring the richly endowed Waterberg coal field in the Limpopo Province of South Africa. The Company is committed to value-added growth through becoming an independent coal and energy producer at its projects in South Africa. The Company has entered into three joint ventures with Sekoko Resources, a South African black empowerment company (BEE) and Sekoko has two directors on the Board of Firestone Energy. Corporate Details ASX: FSE JSE: FSE Issued Capital: 2,401 million ordinary shares Major Shareholders: Sekoko Resources (Pty) Ltd Colbern Fiduciary Nominees Ltd Bell Potter Nominees Ltd Directors and Officers: Non Executive Directors: John Dreyer (Chairman) Timothy Tebeila (Deputy Chairman) Colin McIntyre John Wallington Sizwe Nkosi Company Secretary Jerry Monzu Contact: Suite B9, 431 Roberts Road Subiaco, Western Australia 6008 Tel: +61 (0)8 9287 4600 Web: www.firestoneenergy.com.au Date: 17/12/2010 15:41:01 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. 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