Forbes & Manhattan Coal Corp. (FMC.TO: Quote) and Rio Tinto Plc (RIO: Quote,RTNTF.PK,RTPPF.PK,RIO.L) announced that they have entered into a definitive agreement where Forbes Coal will acquire 100% ownership of the shares and shareholder claims of Riversdale Mining Limited in Riversdale Holdings (Proprietary) Limited or "RHPL".
Forbes Coal said it will acquire RHPL''s 74% interest in the Zululand Anthracite Colliery or "ZAC", a current producing anthracite mine, and RHPL''s 74% interest in the Riversdale Anthracite Colliery or "RAC", an undeveloped anthracite resource. The balance of 26% of each of ZAC and RAC is owned by Black Economic Empowerment Partners.
Both properties are located in the Kwa-Zulu Natal province of South Africa and are located approximately 230 kilometres from Forbes Coal''s Aviemore operations.
The base consideration payable by Forbes Coal for the transaction is estimated to be C$52.3 million, via a structured deal with a fixed payment of C$37.5 million payable on closing, and two additional variable payments each estimated to be C$7.4 million.
The first variable payment will be based on saleable production levels for the twelve months ending June 30, 2013 and the second variable payment is based on saleable production levels for the twelve months ending June 30, 2014.
In addition to these payments, Forbes Coal will also pay an annual revenue share of 10% on incremental revenue above C$102 million, to be adjusted for CPI, until June 30, 2025.
The company said the financing of the acquisition will come from a fully guaranteed C$47 million debt facility and cash on hand. The debt facility is being underwritten by Investec Bank, a South African based financial institution, and is available to be drawn on closing, which is expected to occur in May 2013.
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by RTT Staff Writer
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