Chapmans (ASX: CHP) has advised that the company's partly-owned subsidiary, Hallmark Minerals NL, has agreed to acquire an initial 4% interest in the share capital of an overseas company
controlling a start-up coal mining project in Kalimantan, Indonesia.
In addition to this, Hallmark will have a direct interest in the project which will entitle it to a fixed return per tonne of coal sold.
When sales of coal commence, Hallmark will receive a fixed sum (in effect, a royalty) of $1.20 per tonne of coal sold over the expected mine life of up to five years.
This fixed sum will be shared with other participants in the project on the first 800,000
tonnes of coal sold, with one third of that sum initially being payable to Hallmark, and
thereafter it will be payable only to Hallmark Minerals.
The acquisition is being satisfied by payments totalling $400,000 and the issue of
5,000,000 shares at 2.5 cents each in Hallmark Minerals NL.
The shareholding interests in Hallmark Minerals will be: Chapmans Limited - 72%; Southern Cross Exploration NL - 20%; and others 8%.
Chapmans shares rose 20% to 1.8 cents in trading today.
Disclosure: The author holds no positions in the company