The Foreign Investment Review Board (FIRB) of Australia has approved a proposed $100m share placement deal between Haohua Energy International (HEI) and Coal of Africa (CoAL).
CoAL announced on 1 October 2012 that it agreed to the investment by HEI after South Africa's Exxaro chose not to take up its option to participate in the development of CoAL's Makhado coking coal project.
HEI and CoAL will execute an escrow release letter pursuant to which the deposit of $20 million currently held in the escrow account will be transferred to CoAL.
"This amount will be applied toward the subscription for new shares in CoAL at either £0.25 or £0.35 per share," CoAL said in a statement.
Following FIRB's approval, Haohua Energy will subscribe for the initial placement by the end of 2013, thereby gaining between 4.8% to 5.2% interest in CoAL.
An additional $80m at £0.25 a share will be subscribed after the receipt of necessary approvals, particularly from China.
The Chinese regulatory authorities are expected to approve the deal by January 2013.
Image: Haohua's investment will advance CoAL projects in South Africa. Photo: Coal of Africa Limited.