Beacon Hill Resources (AIM: BHR) has entered into an exclusivity agreement with Borneo Mining for the potential acquisition of Minas Moatize, which owns and operates a coal mine in Mozambique with an estimated resource of 33 Mt (million tonnes) of coal, and raised £1.25 million through a placing to fund the due diligence process.
Beacon Hill has paid an initial deposit of US$1 million for the exclusivity in order to complete due diligence and legal agreements to proceed with the acquisition and has proposed to finalize the acquisition in a joint venture (JV) to finance the mine expansion. It is already in talks with potential partners with a view to sign offtake agreements for the coal.
Minas Moatize currently operates a small underground mine producing thermal coal for domestic consumption, which Beacon Hill intends to develop into a larger open pit operation to produce both coking and thermal coal for export markets.
“The acquisition of Minas Moatize would provide the group with a producing coal operation in one of the world's largest undeveloped coking coal regions, the Tete district of northern Mozambique. The board see that additional value can also be achieved through continued mine development and expansion, maximising the full potential of this significant coal asset,” said executive chairman Justin Lewis.
The group simultaneously announced a placing of 416.67 million shares at 0.3 pence per share to raise £1.25 million to fund the due diligence commitments for the acquisition of Minas Moatize. The placing shares will represent 6.6% of Beacon Hill’s enlarged capital.
Disclosure: The author holds no positions in the company