Ducks are aligning.Come on 2014PERTH (miningweekly.com) – South...

Ducks are aligning.Come on 2014



PERTH (miningweekly.com) – South African coal miner Firestone Energy has announced a major funding agreement with a consortium of international investors, while its majority shareholder disposed of its interest in the company.

ASX- and JSE-listed Firestone on Monday reported that it had agreed to the terms for a A$30.7-million funding convertible facility provided by Ariona Company, a special purpose vehicle formed by the consortium.

The funds raised would be used to redeem existing convertible notes, as well as pay outstanding interest on these notes, and provide the company with working capital.

Firestone’s major shareholder Sekoko Resources also sold some 800-million shares in Firestone to Ariona, representing a 25% shareholding in the coal miner, in exchange for A$8-million.

Sekoko would retain a 1.7% shareholding in Firestone.

Ariona would acquire a 10% interest in the Waterberg joint venture from Sekoko for a further A$13-million, reducing Sekoko’s shareholding in the project to 30%.

Ariona also undertook to procure project funding for the Waterberg JV of up to $400-million.

“These transactions represent a significant step in the company’s development of the Waterberg coal project,” said Firestone chairperson Tim Tebeila.

“The financial backing provided by Ariona will allow us to proceed with developing the project to completion. This is an exciting time for the company, and we very much welcome Ariona’s involvement in the project and as a substantial shareholder of Firestone.”

Firestone recently rejected a R300-million offer from the Tata Power Company to buy a 30% stake in the Waterberg JV project. The Indian group based the offer on the coal project being valued at R1.05-billion.

In the first phase of the Waterberg project, Firestone will develop the Smitspan mine, which has a 1.9-billion-ton coal resource, as well as the Vetleegte mine, which is a metallurgical coal deposit.

The project could start supplying coal to two Mpumalanga power stations from 2014. Firestone and Sekoko signed a memorandum of understanding with Eskom in March.

Ariona would nominate two directors to the Firestone board. The deals were subject to the completion of due diligence, and regulatory and shareholder approval.