Australian junior Acacia Coal has entered a binding agreement to acquire a 74% interest in the RAC metallurgical coal project in South Africa through a deal with Coalvent.
Coalvent has agreed to acquire the project from Rio Tinto subsidiary Riverside Holdings and then vend it into Acacia.
Acacia will issue 250 million shares as consideration and 260 million performance shares on the completion of project milestones.
Acacia executive chairman Adam Santa Maria said Acacia had spent the better part of the past year considering projects across the world that could deliver ongoing and significant value to its shareholders within a reasonable timeframe.
“The company is delighted to have been able to secure a high quality and near term production asset capable of rapid development by an experienced management team whose product looks set to fit perfectly into the local anthracite market, as well as the potential to deliver additional product for export,” he said.
“Anthracite is a clean, smokeless coal with low volatiles, high fixed carbon content and has high value in a number of industrial applications, primarily as a reductant in the metallurgical extraction process.”
As South Africa does not have any significant and economic domestic deposits of low impurity metallurgical grade coal (coking or PCI), anthracite has developed as the dominant reductant in the South African pyro metallurgical extractive industry where demand for high quality low impurity anthracite demand is increasing as existing mines near end of life.
“Acacia expects the local demand for quality anthracite to underpin significant returns in respect of the RAC,” Santa Maria said.
Coalvent has also been successful in bringing together significant intellectual property associated with the RAC, which will assist Acacia’s efforts to progress development.
Under the agreement, Coalvent’s management team, which includes mining executives Hugh Callaghan, Robert Scott, Peet Snyders and Filippo Faralla – all of whom have experience in South Africa and the RAC project, together with a track record in the development and sale of mineral resources – will join Acacia, with Callaghan and Scott to join Acacia’s board as managing director and finance director respectively.
Acacia is undertaking a capital raising to raise around $A2 million.
The proceeds of the capital raising will be used for costs associated with the acquisition of RAC and, planned expenditure on the RAC, together with planned expenditure on Acacia’s Comet Ridge coal project and working capital.
Rio already offloaded Riversdale's Mozambique assets in 2014.
The assets were bought by Rio Tinto as part of its $4 billion takeover of Riversdale Mining in 2011.
In January 2013, Rio announced a $US3 billion impairment on the assets and the departure of Doug Ritchie, who lead the acquisition, as well as CEO Tom Albanese, who was replaced by Sam Walsh.
Shares in Acacia were unchanged yesterday at half a cent.
