Coal of Africa to acquire Pan African Resources Holdings Proprietary Ltd

Coal of Africa's shares have risen more than 16% on news it has agreed to acquire all of the shares in and claims against Pan African Resources Coal Holdings Proprietary Ltd (PAR Coal) for R275m, which worked out at about $20.5m.

PAR Coal held a 91% shareholding in Uitkomst Colliery Proprietary Ltd. The balance was held by broad-based trusts and a strategic entrepreneur's trust.

AIM-traded CoAL said it had continued to restructure its balance sheet to align its project pipeline and ensure that it was well positioned to unlock shareholder value through its flagship Makhado development project.

"As part of this restructuring, the company recognised that limited cash flow will be generated during the Makhado pre-production phase over the next three to four years and therefore the company has been focussed on acquiring a cash generating asset," it said.

CoAL said the Uitkomst acquisition represented a highly compelling and attractive value proposition that the company believed to be value accretive and that would provide cash flows as it continued to progress its flagship Makhado project.

CoAL also said it had entered into a loan agreement with the Industrial Development Corporation of South Africa (IDC) and Baobab Mining and Exploration Proprietary Ltd (Baobab), a subsidiary of CoAL and owner of the mining right for the Makhado Project.

According to this agreement, IDC would advance loan funding up to R240m to Baobab for use in the Makhado Project. The loan funding would be used to advance the operations and implementation of the project.

At 13:03 GMT, shares in CoAL were up 16.23% to 3.08p each.