Lachlan Star will pay $25 million in a mix of cash and shares to acquire 100% of the project, which contains an indicated resource of 60 million tonnes of coal as well as an option agreement covering the adjoining Wildebeestfontein Farm, believed to hold significant coal mineralisation that has not been incorporated into a resource estimate.

The indicated resource was categorised under the South African Code for Reporting of Mineral Resources and Mineral Reserves.

The upper seam at the Holfontein project is believed to contain high quality coal with low sulfur and phosphorous and high energy values, while the lower seam contains lower quality sub-bituminous coal, suitable for local power generation or coal-to-liquids feedstock.

An initial payment of $15 million will be made upon transfer of the project tenements to Lachlan Star. This will include a minimum of $9 million cash. The rest of the payment will be made in stages based on specific milestones, including the granting of New Order Mining Rights for the project, and the meeting of certain production targets.

The transaction is conditional upon approval from all relevant regulatory bodies in South Africa.