News of the deal helped Attila’s share price to more than double yesterday, finishing at 40c.
To secure the 70% interest Attila has to pay about $US11.15 million. Attila also will reimburse about $US1 million in past expenses incurred on the project.
For the purchase price Attila gets the plant, equipment, surface rights and other infrastructure Kodiak owned. The funds will also replace the environmental bonds and allow Attila to get the mining rights lease – which comes with an 8% royalty to be paid on all coal produced.
Attila plans to fund this acquisition through its existing 15% placement capacity and also via convertible note debt or a combination of both.
It is seeking to raise $2 million via a 10 million share placement at 20c a share. That cash will be used to fund due diligence expenses on the project.
Kodiak operated an underground high-volatile hard coking coal mine known as Coke No.1 mine in the Cahaba coal basin in Alabama’s Shelby County.
Mining in the Cahaba basin dates back to the American Civil War era.
The agreement gives Attila the option to secure the mining rights to two coal seams found throughout the Kodiak project.
Attila’s major joint venture partner TBL Metallurgical Resources is led by former Cyprus Amax Coal Company president Donald Brown.
During his time with Cyprus Amax, Brown expanded its operations from 10 million tonnes per annum to more than 80Mtpa through developing new mines and buying other companies.
Not surprisingly, Attila intends to appoint TBL as manager of the Kodiak project.
TBL will have a 20% stake in the project and the remaining 10% will be held by other joint venture partners, which may include Konkera.
Those minority interests will be free carried to a decision, at which point they will be asked to stump up their respective share.
The Atkins and Coke coal seams underlie a major portion of the Kodiak project. The seams range in thickness from 0.9-3m.
TBL also has entered into an agreement to lease the underground mining rights to the Atkins and Coke coal seams on a roughly 3100 hectare block from RGGS Land & Minerals. RGGS previously leased the underground mining rights to Kodiak when it operated the Coke No.1 Mine.
Stagg Resource Consultants, engaged by Attila, reckon the project contains an exploration target of 80-100Mt of hard coking coal.
That is on the back of historical drilling done on the project.
Stagg has determined the quality of the washed coal on a dry basis to be in the range of 3-6% ash, 0.6-1% sulfur, 32-36% volatile matter, 56-62% fixed carbon and 8000-8300kcal/kilogram heat content. It also believes the coal would have a free swelling index in the range of seven to nine.
Coal mining started at the Kodiak project by drift mining where the coal outcropped. That was followed by underground mining using continuous miners.
Kodiak operated the Coke No.1 mine until 2008 when it was placed on care and maintenance due to, it is understood, he mining contractor underperforming and ventilation issues due to inadequate mine planning.
