Coal of AfricaLtd. said April 29 that a Chinese industrial conglomerate isconducting due diligence to acquire up to a 34% share in its unit, ,which holds the mining right over the Makhado coking coal project in South Africa.
Under the memorandum of understanding, will pay about US$113.9 million in cash for the stake, putting a value of atleast US$335 million on the Makhado project.
The proposed equity investment is subject to awardingHengshun an engineering, procurement and construction contract, valued at aboutUS$400 million.
The equity investment is subject to a formal due diligenceprocess as well as approval of the transaction from both companies' boards.
The 34% stake will allow Hengshun to nominate a number ofdirectors to Baobab's board; however, the project's effective management andoperatorship will remain with Coal of Africa.
Hengshun may also provide a debt package on commercial arm'slength terms. The company will also have the right to match any alternativeproposals for the provision of the mining contract.
Earlier in April, the integrated water use license forMakhado was suspendedafter the Vhembe Mineral Resources Forum and other parties filed an appeal withthe Department of Water and Sanitation.