buying pressure, page-26

16 April, 2014
Hard Coking Coal Agreements and Debt Documents Signed
ASX Release Stock Code: CDB
Highlights
? Condor has signed the definitive agreement for the acquisition of the South African Hard Coking Coal Projects: The Duel, Mopane and Universal Annex. The terms will now be put forward for shareholder approval.
? Progress in obtaining €10 million in debt funding is now in its final stage. The agreements have been signed and the loan funds will be available in April, Condor will apply the funds to develop its Marianas Magnetite Tailings Project in Chile through to production and to begin the drill-out and feasibility work at The Duel.
Condor Signs Definitive Agreement
Condor Blanco Mines Limited (ASX: CDB; Condor, the Company) is pleased to announce that the definitive agreements for the Signet Hard Coking Coal acquisition have been signed today.
The agreement gives Condor the right to earn an initial stake in The Duel, Universal Annex and Mopane projects, all located in the Soutpansberg Coalfield of northern South Africa from Hong Kong company Signet Coking Coal Limited (Signet). Signet holds 74% of the projects, with the remainder held by a Black Economic Empowerment partner as required under South African law.
Condor will gain an initial 33% interest in Signet by providing US$5m to be spent on the drilling and feasibility work at The Duel. Condor has an additional option over the land holding that forms the Tshipise 2 project that sits east along the same seam as the flagship The Duel project. This option is exercisable at no cost should the The Duel drilling not deliver a minimum inferred resource of at least 30 million tonnes of Hard Coking Coal with an overall maximum ash content of 12% (Minimum Resource), but otherwise will cost US$2.5m in cash and $2.5m of additional earn-in spending.
Should the Minimum Resource be delivered, Condor would pay a further US$5m to increase its stake to 49.75% and also has a final option to increase its ownership of Signet to 68% (being a controlling project stake of 50.3% including the BEE partner). This option is retained until 60 days after the completion of a definitive feasibility study and would cost US$15m. Condor considers the pricing of these stakes to be fair given recent valuations on comparable projects at such advanced stages. For instance, Venmyn Deloitte provided valuations for several adjacent reports to neighbouring company Coal of Africa Limited.1
1 See Page v. of “Independent Geologist Specialist Report: On the Principal South African Operating and Non-Operating Mineral Assets of Coal of Africa Limited”, available at: http://www.coalofafrica.com/assets/technical-reports/venmyn-deloitte-independant-specialist-report_10dec12.pdf