Continental Coal Limited says it has entered into a binding term sheet with a third party to earn into certain of the company’s Botswana prospecting licences.

The South African thermal coal production, development and exploration company added that subject to the completion of confirmatory due diligence on the licence areas, the funding party will obtain the option to earn into a maximum of 80% of Prospecting licences 339/2008 and 341/2008 by assuming exploration activities and costs up to November 2014.

“Continental will therefore retain a free-carry interest of 20% up to the completion of a Bankable feasibility study, subject to the right for the funder to acquire Continental’s residual interest at an agreed price or its fair market value as determined by an independent valuer at that time,” the company revealed.

Continental Coal’s Chief Executive Officer, Don Turvey said the transaction will allow the company to retain an interest in the prospecting licences while focusing ‘our resources on the development of our De Wittekrans project’.

“We remain optimistic about the potential of our Botswana projects and believe bringing in a funding partner is the best approach to enhance the value of these projects,” he said.  The company will keep shareholders apprised of significant developments as this transaction progresses.