| Tue 2 Feb 2010, 8:21 | | FSE - Firestone Energy Limited - Agreement to Acquire Interest in Additional |
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FSE
FSE
FSE - Firestone Energy Limited - Agreement to Acquire Interest in Additional
Properties from Related Party
FIRESTONE ENERGY LIMITED
(formerly Centralian Minerals Limited)
(Registration number: ABN 058 436 794)
(SA company registration number: 200/023973/10
Share code on the JSE: FSE
Share code on the ASX: FSE
ISIN: AU000000FSE6
("FSE" or "the Company")
Agreement to Acquire Interest in Additional Properties from Related Party
Introduction
River Group is auhtorised to announce that FSE and Sekoko Resources (Pty) Ltd
("Sekoko") have entered into an agreement in terms whereof FSE, through its
wholly owned subsidiary Lexshell, will acquire an interest in the prospecting
rights held by Sekoko over the farms Swanepoelpan and Duikerfontein. ("the
Transaction"). Sekoko is a major shareholder of FSE and the company`s BEE
partner.
Description of the Transaction
The transaction will take the form of a Joint Venture agreement between
Sekoko and Firestone it is expected that substantial additional size and
scale will be added to the existing Waterberg project. Significantly, the
farms share boundaries along strike West from the farm Smitspan (Refer Plan -
Figure 1). Drilling data from 9 exploration holes on these farms indicate
that the full sequence of 12 coal zones exists on these farms, 3 holes on
farm Swanepoelpan indicate access at shallow depth to coal within 1.5km West
of the proposed Smitspan pit.
Swanepoelpan shares a common boundary with the farm Smitspan where the
FSE/Sekoko joint venture has recently acquired the surface rights and the
joint venture is completing a bankable feasibility study for the
establishment of an open cast coal mine. Duikerfontein is immediately
adjacent to Swanepoelpan.
The acquisition of Swanepoelpan and Duikerfontein has the potential of
extending both the size and the minelife of the planned Smitspan open cast
mine. It could enable the joint venture to realise significant synergies in
scale and mine options.
John Wallington (Managing Director of Firestone (former Anglo Coal Group
CEO)) said, "we are extremely pleased to have the opportunity of acquiring
these two strategic farms and we believe by increasing the mineral reserves
our ability to offer large sustainable low cost coal supplies to one of the
nearby planned power producers has been materially enhanced".
Tim Tebeila, (Non-Executive Director of Firestone and Chairman of Sekoko
Resources) suggested further that, "this additional transaction makes good
economic sense and will further enhance and strengthen the mutual benefits to
be derived out of the Joint Ventures between Sekoko and Firestone".
It is envisaged FSE acquire a 60% interest in the rights relating to the
above two farms, with Sekoko having a 40% interest therein, on terms similar
to the second joint venture.
In summary FSE will pay Sekoko:
- a non-refundable amount of AUS $100,000 immediately;
- a further non-refundable payment of AUS $100,000 on or before 1 July
2010;
- a cash payment of AUS $1,800,000 on or before 31 July 2011; plus
- the issue to Sekoko of 200 million fully paid ordinary additional shares
in FSE.
Financial Effects
The financial effects of this transaction will be published as soon as they
are determined after the company has completed its due diligence and
valuation exercise as per the conditions precedent.
Conditions Precedent
The agreement is subject, inter alia, to the approval of FSE shareholders,
all regulators, (including the South African Reserve Bank and the JSE) and
FSE financiers. The transaction is further subject to Lexshell conducting a
valuation and due diligence programme in respect of the two farms.
It is expected such approvals will be obtained and the due diligence
completed prior to July 2011.
Catergorisation
This transaction is a related party transaction under the ASX and JSE rules
and the company will prepare all the relevant documentation, including a
circular to shareholders, and approach shareholders for all the relevant
approvals on completion of the due diligence and valuation exercises as per
the conditions precedent above.
For information please contact:
John Wallington
Managing Director
Telephone: +61 8 9381 2755
Pretoria
2 February 2010
Corporate Adviser and Sponsor
River Group
Date: 02/02/2010 08:21:01 Produced by the JSE SENS Department.
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