Beacon Hill Resources, the AIM-listed coking coal producer, has entered into joint venture (JV) with Midwest Africa to explore and develop an area of the Tete Province of Mozambique.
The licence, which is held by Midwest, covers an area of 184km and is located in the centre of the prospective coking coal basin of the Songo Area of the Tete Province, Mozambique, which is in close proximity to existing coal projects.
Beacon Hill will take an 80% interest in the JV company after issuing Midwest with 60m shares.
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Beacon Hill intends to fund the venture using existing cash resources and future cash flows generated from its Minas Moatize site in Mozambique.
Justin Lewis, Chairman of Beacon Hill said: "This licence allows Beacon Hill to significantly expand its resource base and in turn strengthen its foothold in Tete, one of the most exciting coking coal regions in the world.
"Our existing Minas Moatize Mine, which is already producing and exporting thermal coal and is due to commence hard coking coal production imminently, provides an excellent platform around which further coal projects in Mozambique can easily be accommodated.
"In this context, today's announcement is a major step forward for the group in achieving its goals, as the new licence covers a highly prospective area 70 times the size of Minas Moatize, and represents an opportunity for the group to invest in a longer term development project that will further enhance the group's value accretion potential."
The share price rose 5.46% to 9.65p by 14:29.
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