Australian Stock Exchange (ASX) listed coal explorer, African Energy has acquired all shares in Mmamantswe Coal project, owned by Aviva Corporation. This week the dual listed and current owner of Mmamantswe Coal project Aviva announced that it had entered into a conditional agreement with African Energy to sell its Mmamantswe Coal Project to the company.
“Subject to the satisfaction of certain conditions precedent, African Energy will acquire all of the shares in Aviva’s wholly owned subsidiary Botswana Energy Solutions Limited (BES), for a payment of A$3.5 million,” Lindsay Reed, Aviva CEO said this week. Mmamantswe Coal, which holds Aviva’s rights to the Project, is a wholly owned subsidiary of BES. However the agreement is subject to conditions being satisfied before 3 months from date of the agreement.
The conditions are based on the approval of the transaction by Aviva shareholders under the ASX listing rules at an extraordinary general meeting expected to be convened in June, completion of due diligence on the project by African Energy by 3 May 2013 and Mmamantswe Coal being the registered holder of 100 percent of the license under which the project is operated. Mmamantswe Coal currently has the right to earn a 90 percent joint venture interest in the license under a Heads of Agreement with Mawana Minerals, and is currently in negotiations with Mawana to acquire 100 percent of the license.
Aviva also expects the completion of a fundraising by African Energy to finance the acquisition of BES, and the execution of binding sale documentation. Questions sent to African Energy director Phil Clark were yet to be answered, on why the company had a sudden interest in Mmamantswe Coal Project. Reed said Aviva became involved in the project in 2007 and identified a 1.3 billion tonnes coal resource including a probable reserve of 895 million tonnes. Aviva has completed several studies on the Project and has carried out a significant water-drilling programme.
Aviva announced in October 2012 that government has issued the Environmental Impact Statement for the project. Further, Reed said they believe the coal sector in Botswana will now be driven forward through a combination of smaller domestic power stations and access to export coal markets for which a consolidation of resource ownership is required to drive infrastructure investment and unlock value.
“With that in mind the board has positioned the project to be part of a scale up of resources in Botswana and this transaction gives effect to that strategy,” he said. Reed said the sale price would increase Aviva’s cash position and outcome for shareholders. Aviva is in the process of finalising the relevant shareholder meeting documentation and conditions precedent to the transaction.