Coal of Africa Amends Soutpansberg Coal Asset Purchase Agreement

By Alex MacDonald

LONDON--South Africa's Coal of Africa Ltd. (CZA.AU) said Tuesday it has amended the payment terms of its 2010 multi-stage purchase of coal properties from a unit of Rio Tinto PLC (RIO) and Kwezi Mining Proprietary Ltd. in order to provide more financial flexibility as it seeks to settle its historic obligations.

CoAL had agreed to pay $75 million to buy the Chapudi Coal Assets that are part of the Soutpansberg coalfield in the province of Limpopo, South Africa. To date, CoAL has paid $53 million and still has another $22 million to pay.

The miner said it has agreed to pay the outstanding sum in minimum monthly installments of $100,000 until the entire amount plus interest is settled on June 15, 2017. The interest would be 4% per year.

CoAL will have to make certain mandatory payments that are linked to the completion of the company's third stage of its planned equity raise as well as the completion of the sale of Mooiplaats and other non-core asset disposals.

"This was the last of the historic liability issues and this agreement provides certainty of outcome as well as providing CoAL with flexibility," said David Brown, chief executive of CoAL.

CoAL's London shares were flat at 3.25 pence a share as of 0844 GMT, resulting in a market capitalization of 52 million pounds or $72 million.

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