The deal will see the South Africa-based diversified mining company take up to a 19.9% cornerstone interest in Continental Coal and places Continental in a position to advance its discussions on a strategic partnership and off-take funding agreement for De Wittekrans, it’s proposed fourth mine development.
As well as purchasing 100 million ordinary shares at a premium rate, Village Main Reef has also agreed to acquire all the shares held by minority members.
The funds raised will be applied for debt reduction, working capital and shoring up the company's balance sheet once the deal is approved by shareholders at the company’s annual general meeting on March 28.
Continental CEO Don Turvey said the strategic investment and partnership with Village Main Reef would have a significant impact on Continental’s business.
“The introduction of such a strategic and cornerstone investor to our share register demonstrates the value proposition of our operating coal mining business and our coal project development opportunities,” Turvey said.
The De Wittekrans project has total gross saleable proven and probable reserves of 43.8 million tonnes and gross in situ measured, indicated and inferred resource tonnes of 251.1 million tonnes.
Optimisation work late last year proposed exports of 2.4Mtpa of a thermal coal product, ideally suited for the Asian coal market, over an initial 30-year mine life.
The deal adds to Continental's access to capital, with its cash position at the end of last quarter at about $US4.1 million.
