Late last month Aviva announced it had entered into an agreement with AER for the $3.5 million sale of Mmamantswe.

The acquisition of the prospecting license earns Aviva 100% interest in the Mmamantswe project, one of the conditions precedent to the sale of the project.

Aviva chief executive officer Lindsay Reed said he would like to thank the company’s directors for their efforts in concluding the heads of agreement which was entered into in 2007.

“Aviva is pleased to have executed this purchase agreement with Mawana which, on satisfaction of the conditions precedent, would provide Aviva with a 100% interest in Mmamantswe,” he said.

Under the key terms of the license purchase agreement, if Aviva disposes of the license for more than $3 million the company must make a further payment to Mawana of 10% of the difference between the disposal price and $3 million.

Therefore, if Aviva completes the sale as it currently stands it must pay an additional payment of approximately $50,000.

The purchase agreement is subject to the approval of the relevant Botswana minister and Mawana shareholders.

AER will acquire all of the shares in Aviva’s wholly owned subsidiary Botswana Energy Solutions for $A3.5 million ($US3.6 million) as part of the deal.

Mmamantswe Coal, which holds Aviva’s rights to the project, is a wholly owned subsidiary of BES.

The agreement is subject to approval of the transaction by Aviva shareholders at an extraordinary general meeting expected in June and completion of due diligence by AER by May 3.

Other than the requirement that Aviva hold 100% ownership of the project, which has now been met, other conditions include completion of a fundraising by AER to finance the acquisition of BES and execution of binding sale documentation.

Aviva became involved in the project in 2007 and identified a 1.3 billion tonne coal resource including a probable reserve of 895 million tonnes.

It has completed several studies on the project and has carried out a major water drilling program.

It announced in October that the environmental impact statement had been issued.