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Canadian exploration company Benjamin Hill Mining has signed a non-binding letter of intent (LII) to acquire a stake in Aion Mining.

Under the LOI, Benjamin Hill will have a 20% ownership of Aion and its stake in a fully permitted coal project in Santander, Colombia.

The aggregate deal consideration is $1.12m. To this end, Benjamin will pay $600,000 (C$822,301) in cash and issue $525,000 of its shares.

For the share issuance, the price of each share will be “equal to the closing of the share price of the company on the closing date of the proposed transaction”.

Furthermore, it will have an anti-dilution right to maintain the 20% interest in Aion.

Benjamin CEO Cole McClay said: “Benjamin Hill is excited to have the opportunity to work with a highly skilled Colombian mining team to develop a coal asset with a path to generating revenue.

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“There is a solid indication demand for coal assets in the global market will remain strong, as clean thermal technologies continue to emerge, while over 70% of the world’s steel is currently produced using coal.”

The coal property comprises eight known metallurgical and thermal coal seams from recent and historical diamond drilling programmes and surface exposures.

Benjamin said it will continue to compile the property’s recent and historical data, as well as undertake underground bulk sampling of the different seams.

The exploration programme will help the company better establish the known coal seams’ grades and ground conditions.

The finalisation of the deal is subject to various conditions such as Aion’s due diligence by Benjamin.

However, Benjamin also noted that there is no certainty that the proposed deal will be completed.