In early March, the Calgary-based metallurgical miner secured 4900 acres of Appalachian holdings in a $C15 million deal which the company said offered potential to start “multiple” coal mines.
Failure to complete a timely technical report on the property, however, has required Cobalt to extend the closing date to October 31 and provide more than $600,000 in deposits and funding commitments.
Under the new terms of the extension agreement, Cobalt must provide $250,000 by July 15 which, with its original deposit of $500,000, will become non-refundable after completion of due diligence on the lease.
Cobalt will also have to pay $150,000 as recoupable advance royalties, a $150,600 bond with the state Mines Department and a minimum of $200,000 on “face up” improvements.
The miner must also drill a minimum of five test holes on the lands to be leased, each to a depth that tests the Pocahontas No.3 coal seam, and provide the information obtained from the test holes to the vendors.
The arrangement means Cobalt may make payments for the purchase price over four annual instalments with the bulk of the $15 million to be paid in 2014 and 2015.
“I’m very pleased that all parties were able to agree to these amended terms such that we can proceed with the steps needed to place the first of many mines into production,” Cobalt president and chief executive Mike Crowder said.
“The high quality [mid-volatility] metallurgical coal contained on the lands continues to command attractive prices in the domestic and international markets”