South Africa: GVM Buys Half of Baobab Coaladmin
COAL and metal alloys company GVM Metals, which took a secondary listing on the JSE two weeks ago, had bought a 50% stake in the Baobab coal project from coal miner Petmin for about R35m, the companies said yesterday.
GVM Metals also suggested a time line for concluding its empowerment transaction with Motjoli Resources and said it had exercised an option to buy the remaining shares in NiMag, the metal alloys business in which it already holds a 74% stake.
GVM said when it listed that it would issue more shares on the JSE as a result of transactions close to finalisation.
Lack of liquidity means the shares have been untraded at 250c since listing.
Baobab, for which GVM would pay ã‚£2,5m in cash to be raised through a share placement in the UK, consists of prospecting rights granted over 16 farms in the Soutpansberg/Mopane coalfields in Limpopo province containing soft coking and steam coal deposits.
The farms neighbour Rio Tinto’s Chapudi coal project, which Rio Tinto has been exploring since 2003.
Rio Tinto expects to start a pre-feasibility study on developing a coal mine on the site next year and to move to a full feasibility study in 2008.
Petmin said the sale of its interest in Baobab was in line with its strategy of focusing on assets that were generating or close to generating cash.
GVM said at listing it had reached an agreement in principle with Motjoli Resources, which is owned and controlled by Nchakha Moloi and Nonkqubela Mazwai, to buy Motjoli’s coal assets in exchange for a 32% stake in GVM represented by the issue of 38,3-million GVM ordinary shares.
Motjoli’s coal assets include the Holfontein metallurgical coal deposit in Mpumalanga, also containing some thermal coal which can be sold locally.
GVM said because of the need for regulatory and shareholder approvals, the Motjoli transaction was likely to be concluded by about June 30 and the Baobab transaction by April 30.
The exercise of the option to buy the last 26% of NiMag would involve the issue of 4,6-million more shares at 40 Australian cents each, GVM said.