The deal with mining investor Yat Hoi Ning’s Power Origin Developments is still subject to shareholder approval but would represent a direct equity investment equal to 20% of Universal.

Power Origin was specifically set up to allow Ning to invest in Universal.

Completion of the agreement will give Ning the right to be nominated to Universal’s board and will provide concessions to Power Origin such that the Hong Kong group can maintain its 20% stake in Universal in the event of future capital raisings.

Ning said that Power Origin was excited to sign on with Universal and help take the explorer forward.

“We have been attracted to the team’s ability to develop thermal and coking coal assets, and that once funded, the company has the ability to bring these projects into production in ways which bring maximum return to shareholders as demonstrated by the company securing an off-take customer for Kangala,” he said.

Last month Universal signed a 16-million tonne coal supply deal between Kangala and local power utility provider Eskom.

The explorer said that if the investment is taken up in full, it will equate to almost 50% of the company’s equity needs for Kangala which is expected to begin production in third quarter 2013.

Kangala’s coal holdings include 19.5Mt proved reserves, 74.2Mt measured, 19.5Mt indicated and 33.6Mt inferred resources.