Coal of Africa (CoAL) and its black economic empowerment partner Ferret Mining & Environmental Services have completed the sale of the Mooiplaats thermal coal colliery in South Africa for R179.9m ($12.8m).

The development comes after CoAL, its subsidiary GVM Metals Administration (South Africa), and Ferret signed an agreement last month regarding the sale with Mooiplaats Coal Holdings (MCH) and Mooiplaats Mining.

As part of the closure of the deal, CoAL and Ferret sold their shares in Mooiplaats.

Meanwhile, the transaction also saw CoAL disposing of its claims against Mooiplaats Mining’s subsidiary Langcarel, which owns the Mooiplaats colliery.

CoAL CEO David Brown said: “The sale of the Mooiplaats Colliery concludes a process that commenced during 2013 and is the final step in CoAL’s five-point turnaround strategy.

“The sale of Mooiplaats is expected to yield annual overhead savings for CoAL of $1.4m.”

“The funds received will be used to support CoAL’s project pipeline, in particular the development of our flagship Makhado hard coking coal project and/or potentially contribute to the acquisition of a cash-generating asset.

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“In addition, the sale of Mooiplaats is expected to yield annual overhead savings for CoAL of $1.4m, an important factor in CoAL’s strategy of becoming a self-sufficient mid-tier coal miner.”

In relation to the transaction, CoAL already received an initial payment of R52m ($3.7m), while R15m ($1m) was paid to Ferret.

The remaining amount of R112.9m ($8m) is expected to be settled in up to ten quarterly instalments, with the first deferred payment anticipated to be made in August next year.

Located in the Ermelo coalfield in Mpumalanga province, the Mooiplaats colliery is estimated to have resource of 45.1Mt mineable tonnes in-situ (MTIS).