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Xceed Resources To Reveal 'Corporate Transaction'

Xceed Resources (ASX: XCD) has advised that it is in discussions with a third party regarding a proposal which, if it were to proceed, could result in a corporate transaction involving the company.

The company said that the proposal is subject to a number of conditions, including (amongst others) the completion of satisfactory due diligence and execution of formal, binding documentation - with Xceed inviting the proposer to undertake a due diligence process.

Xceed added that the proposal is indicative, non-binding, conditional and incomplete, and there can be no assurance that the proposal will result in any transaction occurring.

Xceed receives mining right for Moabsvelden

At the end of May Xceed received a mining right for the company's 70% held Moabsvelden thermal coal project, which is located in South Africa.

Moabsvelden will be one of the largest new mines located in the vital Witbank coal basin when developed, and importantly its close proximity to Johannesburg is an advantage over other mines - giving it access to industrial/inland market in South Africa.

A plus for Moabsvelden is that it will be entirely open cast, and has a low stripping ratio, with a mine life in excess of 14 years. Production is targeted for mid-2014.

Eskom opportunity

Xceed has the opportunity to tap several markets for its coal, such as Eskom (the State owned power utility) or the industrial domestic market.

The demand for coal from Eskom is set to rise as it is building and commissioning the third and fourth largest coal fired power stations in the world on the basis that they are being configured to burn lower quality coal.

This will allow suppliers to be able to extract more product at potentially better prices from their existing reserves.

Xceed's Moabsvelden is well placed to supply coal into this demand due to being only 50 miles away from Johannesburg, providing the project with a freight advantage equivalent to US$9/t over the majority of the company's competitors.

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