Pan Asia Corporation's (ASX:PZC) managing director Alan Hopkins has turned a previous commercial relationship with Noble Group (SGX:N21) into the latter taking an equity stake at a premium to share price.
A Noble Group subsidiary will buy 7 million shares (5.34% of the Company, post issuance) at an ascribed value of $0.07 per share. Last trade was at $0.063.
There is a voluntary escrow for a period of 9 months for the shares. Subject to PZC obtaining a waiver from the ASX, Noble will have top up rights to maintain its holding post completion.
Pan Asia and Noble had developed a commercial relationship through previous arrangements in East Kalimantan.
Noble has also been appointed a strategic advisor to PT Transcoal Minergy (PT TCM).
PT TCM is developing a High CV Thermal coal project in South Kalimantan, Indonesia and is 75% owned by Pan Asia.
Pan Asia CEO Alan Hopkins said: "We are very pleased to further strengthen the ties between the companies.
"We have a shared motivation to expedite the advancement of production at TCM, and to pursue additional growth opportunities.
"In particular, Noble has a strong understanding of and presence in the Indonesian coal industry and can provide Pan Asia with invaluable support in delivering the TCM Project."
Under the Strategic Advisory Agreement Noble will:
- Provide strategic marketing advice to PT TCM in respect of coal produced from the concession in South Kalimantan;
- Assist with TCM Coal sales agreements direct to end customers; and
- Assist raising capital to finance the development of the high CV thermal coal project (without being under an obligation to provide funding).
- Noble is appointed strategic advisor for sales of TCM Coal on a worldwide basis;
- Noble will be paid a strategic advisory fee, which will commence on coal production and will be calculated by reference to the revenue received by PT TCM on the sale of coal.
Pan Asia holds a 75% stake in TCM which is adjacent to the operating PT Arutmin ATA mine. A Feasibility Study for TCM is currently being updated ahead of an expected development and first production in 2014.
The JORC Resource for all seams at TCM increased to 177 million tonnes (Measured, Indicated and Inferred) from 128 million tonnes (around 6200 GAR kcal/kg) in November.
The strengthening of ties with Noble Group will favourably impact development of TCM, as well as likely put some fire into the market valuation of Pan Asia.
We could see this deal adding 10-15% in short term. The real sizzle is likely to be as the project ramps up to production.
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