South Africa-based Wescoal has signed an agreement with Sitatunga Resources Proprietary to sell the assets of its wholly-owned subsidiary Leeuw Braakfontein Colliery Proprietary (LBC).
The total value of the transaction is ZAR103m ($7.64m), of which around ZAR20m ($1.48m) will be paid within five days of the agreement and the remaining ZAR83m ($6.16m) will be paid later following the fulfilment of certain conditions.
The company has plans to pay the transaction value in cash from funds within the Sitatunga group.
Located in the Klip River Coalfield in KwaZulu-Natal, LBC is an advanced-stage exploration property.
According to Wescoal, the property has no coal reserves and shallow coal on the flanks of the resource area can be extracted using opencast methods, while the balance of the coal can be mined using underground mining methods.
In a statement, the company said: “LBC is a non-core asset of Wescoal and the disposal is in line with the company’s strategy of realising value for shareholders and building a scalable, sustainable business.”
LBC will use the sale proceeds to reduce short-term borrowings of the group as well as to fund strategic growth options.
The transaction is subject to regulatory consent from the Department of Mineral Resources and Competition Commission, as well as procedural matters standard.
Nedbank Corporate and Investment Banking has served as the investment bank, corporate advisor and sponsor.
In June this year, Wescoal signed an agreement with Tokata Resources and Banjosign to sell its Intibane 1 and Intibane 2 collieries located in Mpumalanga for ZAR57m ($4.24m).