Continental Coal's (ASX:CCC) South Africa subsidiary Continental Coal (CCL) has signed final share sale agreements to acquire an initial 64.1% shareholding in Mashala for a cash payment of US$35 million.
The acquisition will boost Continental to a mid-tier coal producer in South Africa.
Settlement of the acquisition of the initial 64.10% interest now only remains subject to consent from the South African Reserve Bank, and approval from the Department of Minerals and Resources for the transfer of the mining rights.
Don Turvey, chief executive officer, said: “We are pleased to announce the signing of these agreements and this important milestone for Continental which now takes us into new territory - the export coal market."
"This transaction has presented a unique opportunity to rapidly build an even stronger company for our shareholders and employees."
"We now look forward to the integration of the Mashala management team, realising the synergy values of the companies, commencing development of the Penumbra project and advancing the extended project pipeline towards production.”
The acquisition provides Continental with immediate export coal production, along with the key Richards Bay Coal Terminal and Transnet rail contracts, and an extensive project portfolio to be developed over the next 5 years.
In addition under the terms of Option Agreements also executed on 15 September 2010 by CCL and Mashala's shareholders, the outstanding 35.9% balance will be acquired within the next 12 months in either cash or, upon a listing of the Company on the Johannesburg Stock Exchange, the issuance of ordinary shares in the Company to an equivalent value.