During 2008 Continental embarked upon a strategy of investing in the highly prospective coal resources industry in South Africa culminating in the successful acquisition in February 2009 of a 74% interest in Continental Coal Limited, a company with interests in high quality production and advanced-stage exploration assets in established coal mining regions of South Africa. Shareholder approval was obtained for the transaction at the Company’s Annual General Meeting on 28 November 2008.
For Continental the benefits are:-
- Near term production with early projected positive cash flows
- Resources located within one of the world’s largest and most developed coal mining regions
- Access to well established infrastructure and coal mining support services
- The increasing demand for coal in South Africa to meet power generating requirements
- Growing coal export potential
- Established BEE partner – Masawu Investments (Pty) Ltd (26% shareholder)
Continental is encouraged with the development of the projects to date and the short term prospects for local met coal in South Africa and export thermal coal demand from India and China.
The acquisition and development costs of the coal projects have been funded by way of a debt financing instrument and several placements to institutional and sophisticated investors.
The Company will continue to seek coal investment opportunities in South Africa and develop these investments to production through its South African subsidiary Continental Coal Ltd (SA).
