Continental Coal (ASX: CCC, AIM: COOL) has completed a strategic financing transaction with South Africa-based diversified mining company Village Main Reef (JSE: VIL), which now holds a 16.34% interest in the company.
The sale of small shareholdings has also been completed, with Village Main Reef acquiring a total of 11,752,818 shares at $0.0521 per share.
The funds raised will be applied to debt reduction, working capital requirements and overall strengthening of Continental's balance sheet.
Don Turvey, chief executive officer of Continental Coal, commented: "As a result of this transaction Continental has significantly enhanced its balance sheet, streamlined its capital structure and strengthened the company's growth strategy and operating credentials in South Africa, with a major, well-credentialed partner.
"We welcome Village Main Reef as our committed strategic partner, a group that shares our vision of growing our coal assets in South Africa."
Earlier this week Village Main Reef received South Africa Reserve Bank approval to go ahead with the financing deal.
The South Africa Reserve Bank approval was the only outstanding condition for Village Main Reef to take up to a 19.9% cornerstone interest in Continental Coal.
As a result of the completion and financial settlement of this transaction Village Main Reef has the right to appoint a representative to the Continental board, which it will do in the coming weeks.
De Wittekrans Coal Project
The buy-in places Continental in a position to advance its discussions on a strategic partnership and offtake funding agreement for its proposed fourth mine development, the De Wittekrans Coal Project.
Continental is continuing to progress its application for a New Order Mining Right and Integrated Water Use Licence for the project.
In parallel with the permitting and approval processes underway, the company also continued its discussions and negotiations regarding a potential long-term offtake agreement, strategic partnership and stand-alone funding agreement for the De Wittekrans Coal Project.
Discussions with several parties are ongoing and are focused on the finalisation of a funding arrangement.
This will allow the company to bring the planned initial seven year open cast mine into development and provide funding for the subsequent forecast 30 year, 3.6 million tonne per annum underground mine development and secure a long-term strategic offtake partner for the operations.
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