Continental Coal Limited, the South African thermal coal production, development and exploration company has advised that completion and financial settlement of the strategic financing transaction with South African based diversified mining company Village Main Reef Limited (VMR) has now occurred.
Continental and VMR had entered into binding financing agreements, whereby VMR would subscribe for 100 million ordinary shares in Continental at an issue price of A$0.08 per share, raising a total of A$8.0m and establish and fund a mechanism for the sale of parcels of shares held by shareholders with a market value of less than $500 (being shareholdings less than a Minimum Shareholding as provided for in the Company’s constitution) and acquire on a discretionary basis further Continental shares on market at a price of up to A$0.10 per share, thereby increasing VMR’s shareholding in the Company to 19.9% of the issued share capital of the Company.
Continental also confirmed that monies due under the Placement have been received and the application has been made for the new shares to be admitted to trading on the ASX and AIM markets. Trading is expected to commence on AIM on or around 10 May 2013.
Monies raised from the Placement will be applied to debt reduction, working capital requirements and overall strengthening of the Company’s balance sheet. In addition, the Company can confirm that under the Sale of Small Shareholdings facility, 3,560 Minority Members elected not to retain their shareholdings and VMR have acquired 11,752,818 shares at the minimum sale price in accordance with the Company’s constitution of $A0.0521.
Minority Members will shortly receive the sale consideration by way of cheque in Australian dollars to the address recorded in the share register as at the Closing Date. Following completion of the Placement and Sale of Small Shareholdings, VMR now holds an interest of 16.34% in the issued share capital of the Company.
Commenting on completion of the transaction, Continental Chief Executive Officer, Don Turvey, said: ”As a result of this transaction Continental has significantly enhanced its balance sheet, streamlined its capital structure and strengthened the Company’s growth strategy and operating credentials in South Africa, with a major, well credentialed partner.”
“We welcome Village Main Reef as our committed strategic partner, a group that shares our vision of growing our coal assets in South Africa,” Turvey added.
As a result of the completion and financial settlement of this transaction VMR have the right to appoint a representative to the Continental board, which it will do in the coming weeks.