“The recently announced Cook mine acquisition from Xstrata offers our shareholders the prospect of immediate cash flow from existing coking coal production, while the undeveloped Minyango deposit with its abundant coking coal resources – close to Cook – presents tremendous growth potential for our long-term strategy,” Caledon CEO George Salamis said.
“Together, the two deposits display similar geological, structural and coal quality traits. Though the Minyango deposit has yet to prove itself to be an economically viable coking coal producer of its own right, the directors believe that working synergies can be achieved owing to the proximity of the Minyango deposit to the Cook mine.”
Under the terms of the option agreement signed with Red Flint, Caledon Resources subsidiary Caledon Jersey has the right to acquire the entire issued share capital of Hazelhurst Holdings, which indirectly owns an 80% interest in the Minyango coal project, and a right to acquire the remaining 20% on a staged payment basis spread over about 14 months.
The deal gives Caledon immediate access to the project area to begin exploration.
As part of the transaction, Caledon Jersey will acquire the benefits from and assume the obligations of Red Flint under its agreement with Watami Trading, the company from which Red Flint originally acquired Hazelhurst.
The total staged purchase price payable to Watami is about $A42 million, of which at least $A9.6 million may be paid in Caledon stock.
Caledon said based on the coal quality work done on the area, and surrounding areas to date, Minyango will produce a mid volatile hard coking coal and a thermal coal by-product.
