Coal of Africa Ltd CZA Proposed US$100 Million Placement with BHE

  Coal of Africa Ltd (CZA) - Proposed US$100 Million Placement with BHE

RNS Number : 5490N
Coal of Africa Limited
01 October 2012










ANNOUNCEMENT

1 October 2012



US$100 million placement with the Beijing Haohua Energy Resource Group to form
   a strategic partnership to facilitate the development of Coal of Africa
                Limited's operations and development projects

Coal of Africa Limited ("CoAL") is pleased to announced that it has entered in
to a binding  offer letter from  Haohua Energy International  (Hong Kong)  Co. 
Limited ("HEI"), a wholly owned  subsidiary of Beijing Haohua Energy  Resource 
Co. Limited ("BHE"), to subscribe for US$100 million of CoAL shares at a price
of £0.25 per share, subject to, inter  alia, the terms and conditions set  out 
below ("Placement").

The Placement has been structured in two tranches:

· An initial  US$20 million  tranche ("Initial  Placement"), which,  given 
that HEI is a  Chinese State-owned Entity, is  conditional upon HEI  receiving 
approval from the Australian Foreign  Investment Review Board ("FIRB"),  which 
would provide HEI  with an interest  in CoAL of  between 4.8% to  5.2% in  the 
issued share capital of CoAL; and



·  A  second  subscription  of  US$80  million  ("Conditional  Placement") 
conditional upon receiving the  requisite approvals, including those  required 
from the relevant authorities in the People's Republic of China ("PRC").



Profile of BHE and formation of a long term strategic partnership

BHE is a  coal producer,  based in Beijing,  and engaged  in mining,  washing, 
export and sales of coal products and the largest exporter of anthracite  coal 
from China.  BHE is  listed on  the Shanghai  Stock Exchange  and one  of  the 
constituent stocks of the SSE 130 and the SSE Composite Index.BHE was founded
in  2002  by  Jingmei  Group,  the  only  Chinese  coal  producer  under   the 
authorisation of  the  Beijing  Municipal  Government;  Minmetals,  a  leading 
diversified mining company; Shougang,  one of the  largest steel producers  in 
China; China Coal, one  of China's top  3 coal producers;  and CCRI, the  only 
coal research institute servicing the coal industry in China.

The Placement would  be the first  investment by  HEI outside of  the PRC  and 
serves to facilitate  the formation  of a  long term  and mutually  beneficial 
strategic partnership  between CoAL  and  HEI, with  a  vision to  unlock  the 
intrinsic value inherent in CoAL's operations and projects.



Commenting on  the  Placement,  John  Wallington,  CEO  of  CoAL,  said:  "The 
placement would expedite the  development of CoAL's projects  and lead to  the 
formation of  a  strategic partnership  and  provide direct  exposure  to  the 
world's largest coking coal market.  The exchange of financial, technical  and 
operational expertise will facilitate the  growth and development of CoAL  and 
the coking coal industry in South Africa."

In this  context,  and  subject  to the  implementation  of  the  Initial  and 
Conditional Placement, CoAL  has undertaken to  facilitate the appointment  of 
two HEI nominees to the board of  directors of CoAL and engage in  discussions 
to  formalize  the  strategic   partnership.  The  engagement  would   include 
consultation  on  commercial,  technical,  financial  and  operational  issues 
pursuant to which  CoAL will  be able to  draw on  HEI's technical  expertise. 
Furthermore, HEI has undertaken to use its best endeavours to arrange  further 
financing, on the most favourable terms  available, in the development of  the 
CoAL's substantial project pipeline.

David Brown, Chairman of CoAL, said: "I  am pleased to have had the  privilege 
of  seeking  to   formalise  a   partnership  with   HEI  in   pursuit  of   a 
company-transforming transaction through capital investment. The  introduction 
of HEI as a cornerstone shareholder will position CoAL to unlock its intrinsic
value."

Initial Placement

The Initial Placement will be for a consideration of US$20 million at a  price 
of £0.25 per CoAL share.

The Initial Placement  is only subject  to FIRB approval  as HEI have  advised 
CoAL that PRC approval  is not required. Accordingly,  should HEI obtain  FIRB 
approval, HEI will subscribe  for the Initial Placement  on the earlier of  31 
January 2013  and  the date  on  which HEI  receives  all approvals  from  the 
applicable PRC  provincial  regulatory authorities  required  by HEI  for  the 
Conditional Placement.

To demonstrate  and  secure  its  commitment  to  subscribe  for  the  Initial 
Placement, HEI has agreed to provide CoAL with a US$20 million deposit to  be 
applied to the  settlement of the  Initial Placement by  31 October  2012.The 
deposit will be held in an escrow account until HEI receives FIRB approval for
the Initial Placement and will  only be repayable to  HEI if FIRB approval  is 
not obtained.

If HEI has not obtained the required PRC provisional regulatory approvals  for 
the Conditional Placement by 31 January 2013, the Initial Placement will still
proceed but will be adjusted  so that HEI pays  a subscription price of  £0.35 
per CoAL share.

Conditional Placement

In addition  to the  Initial Placement,  HEI has  agreed to  subscribe for  an 
additional US$80 million of CoAL shares at a price of £0.25 per share, subject
to the fulfilment of the following conditions:



· all approvals from the applicable PRC provincial regulatory  authorities 
required by HEI;



· CoAL shareholders approving the Conditional Placement as required by the
ASX Listing Rules and by section 611, item 7 of the Corporations Act; and



· CoAL  and HEI  obtaining all  other necessary  regulatory and  statutory 
approvals and consents.



If for any reason these conditions cannot be fulfilled before 31 January 2013,
CoAL and HEI have  agreed to cooperate  to consider other  options for HEI  to 
provide the requisite funding support to CoAL.



For more information contact:



John Wallington    Chief Executive Officer Coal of Africa             +27   11 
                                                                      575 4363
Wayne Koonin       Financial Director      Coal                    of +27   11 
                                           Africa     575 4363
Shannon Coates     Company Secretary       Coal of Africa             +61   89 
                                                                      322 6776
Sakhile Ndlovu     Investor Relations      Coal of Africa             +27   11 
                                                                      575 6858
Jos   Simson/Emily Financial  PR   (United Tavistock                  +44   20 
Fenton             Kingdom)                                           7920
                                                                      3150
Chris     Sim/Neil Nominated Adviser       Investec Bank plc  +44   20 
Elliot                                                                7597
                                                                      5970
Robert Smith       JSE Sponsor             Investec Bank Limited      +27   11 
                                                                      286 7000
Charmane           Financial   PR   (South Russell & Associates +27   11 
Russell/Jane Kamau Africa)                                    880 3924
                                                                      or

                                                                      +27   82 
                                                                      372 5816

About CoAL:

CoAL is an AIM/ASX/JSE listed coal exploration, development and mining company
operating in  South Africa.  CoAL's  key projects  include the  Vele  Colliery 
(coking and thermal coal), the Greater Soutpansberg Project, including  CoAL's 
Makhado Project (coking  coal) and the  Mooiplaats and Woestalleen  Collieries 
(both thermal coal).

The Mooiplaats Colliery commenced production in 2008 and is currently  ramping 
up to  produce  1.6  Mtpa.  The Woestalleen  Colliery,  acquired  through  the 
acquisition  of  NuCoal  Mining  (Pty)  Limited  in  January  2010,  currently 
processes approximately  2.5Mtpa  of saleable  coal  for domestic  and  export 
markets. The Woestalleen Complex also incorporates three beneficiation  plants 
with a total processing capacity of 350,000 run-of-mine (ROM) feed tonnes  per 
month.

CoAL's Vele  Colliery commenced  production  in Q1  2012. During  the  initial 
phase, the operation is targeting 2.7  Mtpa ROM production to produce  1.0Mtpa 
of saleable coking coal. The Makhado  Project, CoAL's flagship project in  the 
Soutpansberg coalfield,  is well  into  the feasibility  stage, with  a  draft 
Definitive Feasibility Study having been reviewed  by the CoAL Board in  March 
2012. An application for a New Order Mining Right for the Makhado Project  was 
submitted in January 2011.

In May 2012,  CoAL acquired the  Chapudi coal project  and several other  coal 
exploration properties  in  the  Soutpansberg  coal  basin  in  South  Africa, 
subsequently renamed  the  Greater  Soutpansberg Project,  from  the  previous 
owners,  including  Rio   Tinto.  The  Greater   Soutpansberg  Project  is   a 
consolidation of nine potential  coking and thermal  coal assets grouped  into 
three proximate regions, namely Mopane,  Makhado and Chapudi. The  acquisition 
of these  assets strengthens  Coal of  Africa's position  as one  of the  most 
substantial holders of prospecting and mining rights for coking coal in  South 
Africa's *Soutpansberg coalfield.

The updated resource  estimates are  presented in detail  in the  "Independent 
Technical Statement  for  Greater Soutpansberg  Projects  for Coal  of  Africa 
Limited, 31st May 2012" ("Technical Statement") prepared by Venmyn Rand  (Pty) 
Ltd  ("Venmyn"),  which  is   available  on  the   Coal  of  Africa   website, 
www.coalofafrica.com.





                     This information is provided by RNS
           The company news service from the London Stock Exchange

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MSCMBBATMBJMMLT -0- Oct/01/2012 06:00 GMT
 
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