The financing package with Investec Bank will give Coal of Africa the right to require Investec to buy up to 81 million shares in the emerging coal developer.

The aggregate value of shares subscribed to Investec is $8.7 million while an additional facility of $50 million may be settled in cash or shares over a two-year term at Coal of Africa’s discretion.

While the $50 million loan is primarily intended to help the coal company replace its existing short-term $40 million debt with JP Morgan Chase, the remainder is planned for use at Makhado and the recently operational Vele mine.

Coal of Africa chief executive John Wallington said the deal was a positive signal for long-term growth.

“The funds will be used for expenditure on key items for the Makhado project, additional funding for the ramp-up of production at the Vele colliery and for general working capital purposes,” he said.

Makhado covers 8190 hectares of Soutpansberg’s Makhado region which holds 1.3 billion tonnes of coal.

Based on the reserve and resource update announcement published on June 13, the JORC-compliant resource for the site is 795.6 million tonnes of coal, 344.4Mt minable.

Vele sent its first 1500-tonne shipment to Mozambique’s port of Maputo last April in an exercise deemed a successful showcase of the mine’s viability and the region’s increasingly developed rail infrastructure.