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Soutpansberg Deferred Consideration amendment agreement signed
Coal of Africa Limited
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000CZA6
JSE/ASX/AIM share code: CZA
("CoAL or the "Company" or the "Group")
ANNOUNCEMENT 4 May 2016
Soutpansberg Deferred Consideration amendment agreement signed
Coal of Africa Limited (the “Company“ or “CoAL”) is pleased to announce that it has successfully
concluded the mediation process and reached an agreement (the “Amendment Agreement”) with
Rio Tinto Minerals Development Limited (“Rio Tinto”) and Kwezi Mining Proprietary Limited
(“Kwezi”, together with Rio Tinto, “the Sellers”) regarding the deferred consideration payable by
CoAL’s subsidiary, MbeuYashu Proprietary Limited (“MbeuYashu”), to the Sellers in connection with
its acquisition of the Chapudi Coal assets (part of the Greater Soutpansberg Project, “GSP Project”).
During 2012, CoAL acquired the shares and shareholders claims held by the Sellers in both
Chapudi Coal Proprietary Limited (“Chapudi”) and Kwezi Mining and Exploration Proprietary Limited
(“KME”). Chapudi and KME held the prospecting rights for the GSP Project and related exploration
properties in South Africa’s Soutpansberg coalfield in the province of Limpopo (collectively, the
“Chapudi Coal Assets”). The full acquisition price for the shares and shareholders claims in Chapudi
and KME was US$75 million of which US$30 million was to be settled by way of deferred
consideration payments. To date, CoAL has settled approximately US$11.2 million of the deferred
consideration.
During March 2016, that Company and its subsidiary company, MbeuYashu received a notice from
Rio Tinto and Kwezi declaring the Deferred Consideration (Announcement 8 March 2016) and
ancillary amounts to be due and payable (the "Allegation"). The Company and MbeuYashu disputed
the Allegation.
In connection with the foregoing dispute, the Parties entered into a mediation process and as a
result, have agreed to settle their dispute by further amending the terms that regulate the payment
of the Deferred Consideration (plus Accrued Interest and Costs) still due and owing to the Rio Tinto
and Kwezi.
Salient features contained in the Amendment Agreement include:
- Amendment of the minimum monthly payments from US$100,000 to US$650,000.
- US$1,000,000 payable on the 15th of May 2016 and US$2,000,000 payable on the 15th of
September 2016.
- Full and final settlement of the outstanding purchase price plus all accrued interest remains
15 June 2017.
- Interest accrued on the outstanding balance remains at 4% per annum, and
- Certain mandatory payments have been stipulated in the Amendment Agreement, subject to
the successful completion of the sale of assets and of equity not associated with the
proposed Universal Coal Plc transaction
- The Amendment Agreement allows the Company to pursue its proposed business objectives
Together with the Amendment Agreement, the security documents entered into with the Sellers
pursuant to which CoAL has granted security in the form of a first ranking pledge over the shares
held by CoAL in MbeuYashu, the holding company of Chapudi and KME. CoAL is the effective
owner of 74% of the shares in Chapudi and KME. To date, an amount of US$18.8 million remains
owing by CoAL to Rio Tinto and Kwezi.
David Brown, Chief Executive Officer of CoAL, commented: “This was the last of the historic liability
issues and this agreement provides certainty of outcome as well as providing CoAL with flexibility. I
would like to thank all parties for their co-operation in realising a solution”.
Authorised by
David Brown
Chief Executive Officer
4 May 2016
For more information contact:
David Brown Chief Executive Officer Coal of Africa +27 10 003 8000
De Wet Schutte Chief Financial Officer Coal of Africa +27 10 003 8000
Celeste Riekert Investor Relations Coal of Africa +27 10 003 8000
Tony Bevan Company Secretary Endeavour Corporate Services +61 08 9316 9100
Company advisors:
Jos Simson/Emily Fenton Financial PR (United Kingdom) Tavistock +44 20 7920 3150
Matthew Armitt/Ross Allister Nominated Adviser and Broker Peel Hunt LLP +44 20 7418 8900
Charmane Russell/Olwen Auret Financial PR (South Africa) Russell & Associates +27 11 880 3924 or
+27 82 372 5816
Investec Bank Limited is the nominated JSE Sponsor
About CoAL:
CoAL is an AIM/ASX/JSE listed coal exploration, development and mining company operating in South Africa. CoAL’s key projects
include the Vele Colliery (coking and thermal coal), the Greater Soutpansberg Project /MbeuYashu, including CoAL’s Makhado Project
(coking and thermal coal).
AU: Coal of Africa Limited, Suite 8, 7 The Esplanade, Mount Pleasant, Perth WA 6153, Australia, Tel: +61 8 9316 9100, Fax: +61 8 9316 5475
ZA: South Block, Summercon Office Park, Cnr Rockery Lane and Sunset Avenue, Lonehill, 2191, Tel: +27 10 003 8000 Fax: +27 11 388 8333 Email: adminza@coalofafrica.com
Bernard R. Pryor – Chairman, David H. Brown – Chief Executive Officer, De Wet O Schutte
Non-executive directors: Peter G. Cordin, Andrew D Mifflin, Khomotso B. Mosehla ,Thabo F Mosololi, Rudolph H. Torlage
Date: 04/05/2016 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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