Aviva (ASX:AVA; BSE:AVIVA) has entered into an agreement with Mawana Minerals to purchase 100% of the prospecting licence PL069 in Botswana for US$300,000, allowing it earn a 100% interest in the Mmamantswe project.
Once the purchase of the licence is completed, it will also fulfill one of the conditions precedent to the sale of the Mmamantswe coal project to African Energy (ASX:AFR; BSE:AFR).
Currently, Aviva has a 90% interest in the project and it acquiring a 100% interest is one of the conditions precedent to the African Energy acquisition.
Aviva is in the process of selling its 1.3 billion tonne resource Mmamantswe Coal project in Botswana for $3.5 million to African Energy.
The licence purchase agreement with Mawana is subject to conditions precedent including Mawana notifying the relevant Botswana Minister of the conditional sale and getting ministerial approval and Mawana shareholders unanimously approving the sale.
Other key terms of the purchase agreement include a provision that if Aviva disposes of the licence for more than US$3 million there will be a further payment of 10% of the difference between the disposal amount and US$3 million.
If the sale of Mmamantswe project reaches fruition, then Aviva will have to pay an additional US$50,000 to Mawana.
The sale to African Energy will boost Aviva's cash position, which at the end of the March 2013 quarter stood at $19.4 million.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.