AIM-listed South African thermal coal production company Continental Coal has completed settlement of the sale of its shareholding in Vanadium and Magnetite Exploration and Development Company (VanMag).
It reported that the total sale proceeds of approximately $10m would be used towards purchasing outstanding minority interests in Mashala Resources that were not already held by Continental Coal's principal, 74%-owned subsidiary in South Africa.
Following the acquisition of outstanding interests in Mashala, which the company said was scheduled to be completed over the coming days, Continental Coal's principal South African subsidiary will hold a 100% interest in the operating Ferreira Coal Mine and Penumbra Coal Mine.
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Both mining operations produce high quality thermal coal which is exported through the Richards Bay Coal Terminal and sold under an existing off-take agreement into Asian markets predominantly.
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In addition, Continental Coal's African subsidiary will hold a 100% interest in the De Wittekrans Coal Project which is forecast to become the company's fourth coal mine and where the company is in advanced negotiations with respect to a potential long-term off-take agreement, strategic partnership and stand-alone funding agreement for its development.
Don Turvey, Chief Executive Officer of Continental Coal, said: "To be able to conclude the sale of one of the company's non-core assets and use the proceeds towards the finalization of acquiring the outstanding minority interests in Mashala, is a major positive for the company and its thermal coal business in South Africa."
"We have over the past three years invested heavily in establishing a South African thermal coal production, development and export business, that includes the Vlakvarkfontein and Ferreira Coal Mines and now following the commencement of mining activities at the Penumbra Coal Mine, we anticipate increased returns for our shareholders in the coming years," he added.
Continental Coal's share price was up 7.41% to 3.62p at 08:43 on Friday.
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