The planned South African sell off was referred to in a company announcement three weeks ago with Continental considering offers from third parties at the time.

LSP Energy’s acquisition is expected to be completed in mid-January if due diligence and various approvals go according to plan.

“The board is firmly of the view that the offer (if completed) would leave the company debt free with excess cash reserves at its disposal and the ability to pursue new opportunities that are continually being presented to it,” Continental said.

The deal follows Continental’s failed rights issue in October with a take up of about 10% received out of the $35.17 million target.

Continental is consequently working on getting shareholders who participated in the rights offer the opportunity to have their funds returned.

Continental has two operating mines – Vlakvarkfontein and Penumbra – in South Africa’s major coal fields, producing about 2 million tonnes per annum of thermal coal for the export and domestic markets.

In September last year a feasibility study was completed on a proposed third mine, the De Wittekrans coal project, with a mining right granted.