🕐19.04.10 - 03:25 Uhr

FURTHER OFFTAKE WITH EDF TRADING AND ADDITIONAL US$27m FINANCING FACILITY



Continental Coal Limited (CCC) ASX Announcement 19 April 2010 FURTHER OFFTAKE WITH EDF TRADING AND ADDITIONAL US$27m FINANCING FACILITY
Key Points: -Second off-take agreement to be entered into with EDF Trading, a leader in the international wholesale energy markets and a wholly-owned subsidiary of EDF S.A., the worlds largest energy utility; -Option granted for EDF Trading to provide up to an additional US$20M of funding for the Vlakplaats Coal Mine which will be repaid from coal production; Additional US$27M (ZAR200M) funding agreement entered into with South African investment consortium; -Funding package and off-take agreement with EDF Trading is in addition to the US$20M funding and off-take arrangements previously announced on 30 March 2010; -Completion of off-take discussions and funding arrangements now allows -Continental to complete acquisition and aggressively fund development of its portfolio of coal mines into production over the next 12 months; and -First Continental coal mine, Vlarkvarkfontein, to commence first coal sales in May 2010. Emerging South African focused coal company Continental Coal Limited (ASX: CCC) ("Continental" or "the Company") has confirmed its position as one of the leading South African junior coal companies, following reaching agreement in principle of another landmark off-take and funding arrangement with EDF Trading and a financing agreement that will provide the necessary funding to allow Continental to complete the acquisition and fund development of its Vlakplaats Coal Mine in South Africa. Off-Take Agreement and Funding Option with EDF Trading Continental has strengthened its growing strategic relationship with one of the worlds leading energy traders, EDF Trading, with the announcement today of a second off-take and exclusive funding option arrangement.

This arrangement follows the previously announced deal with EDF Trading to provide Continental with a "coal loan" of US$20M, through an advance purchase of thermal coal from the Vaalbank, Project X and Vlakvarkfontein coal mines (refer ASX announcement dated 30 March 2010). Under the proposed terms of the latest arrangement, EDF Trading has agreed in principle to an off-take agreement with Continental that will see them secure thermal coal production from the Vlakplaats mine for an initial period of 20 years, at a market API4 benchmark price FOB Richards Bay.

EDF Trading has also been granted an option to provide an additional "coal loan" of US$20M, through an advance purchase of thermal coal from the Vlakplaats coal mine. The off-take arrangements for Vlakplaats marks another key milestone for Continental and follows the off-take arrangements previously announced with EDF Trading on its Vaalbank and Project X Coal Projects and the execution of documentation that has secured Continental the necessary key infrastructure to rail its planned 300,000t per month of coal to port for export. The off-take arrangements will cover 100% of Vlakplaats sales of export thermal coal forecast to be 2.4Mtpa with first production to commence in the second half of 2011 and continue over an initial 20 year mine life.

The pricing structure for the Companys off-take agreements on Vlakplaats will be based on, the internationally-recognised benchmark price for coal exported out of South Africas Richards Bay terminal -- API4.

Based on the current API4 price, the Vlaplaats offtake agreement is worth approximately US$155M a year in revenue to Continental and is valued at more than US$3.0 billion over the initial 20 year term of the off-take contract. Commenting on the transaction, Continental Coal Limited Managing Director, Mr Bruce Buthelezi, said: "EDF Trading has proven itself to be a partner committed to the development of key Continental Coal projects in South Africa, and we look forward to working and successfully bringing our projects into production over the coming year." "From the speed at which we have been able to conclude our second transaction with such a globally important energy trader, it is clear that they acknowledge that we are a company committed to developing our projects in a manner that mitigates risk and maximises production opportunities, and that we also have the projects and team to deliver on these goals" Mr Buthelezi added. "We only see this relationship strengthening over time and are genuinely excited to have chosen a company such as EDF Trading as our partner, as we feel it will be key to Continental Coal meeting and maintaining its production and growth plans." U$27M Funding Agreement With South African Resource Focussed Investment Consortium Continental has further entered into an additional funding arrangement of US$27M (ZAR200M) with a South African resources focussed investment consortium.

The financing provides Continental with the necessary funding to allow it to complete the acquisition of the Vlakplaats Coal Mine and provide additional development funding. Under the terms of the funding agreement, the consortium will provide Continental with a 5 year, structured debt facility ("Debt Facility").

The Debt Facility will be used to repay amounts outstanding under its existing debt facility, fund outstanding acquisition costs and meet the development capital costs of the Vlakplaats Coal Mine.

The Debt Facility will be standard for a debt facility of this nature and carry an interest rate of 10% p.a.

It will be repaid from either operating cashflow over the 5 year term of the Debt Facility, or repaid in full on maturity, or converted into equity upon agreed conversion milestones.

The Agreement is subject to finalising formal documentation and final due diligence items. Continental has over 395 million tonnes of resources of coal on its South African properties.

It expects production at its predominantly export thermal coal mines at Vaalbank, Project X and Vlakplaats to commence in 2011, at the rate of over 300,000 tonnes per month of export coal. As announced to the market on 30 March 2010 the Company has commenced mining activities at its Vlakvarkfontein coal mine and expects to commence coal sales in May 2010.

Further updates of progress at Vlakvarkfontein will be announced shortly. To view a full copy of the ASX announcement please click here: http://esp.gewru.com/em/message/email/view.php?id=497956&u=15636 Ends For further information: Peter Landau, Executive Chairman, Continental Capital Limited Ph: 08 9488 5220 David Tasker, Professional Public Relations, Ph: 08 9388 0944/0433 112 936 Em:
--------------------------------------------------------------------------- This email was sent by Karen Oswald, PPR (WA) Pty Ltd, 588 Hay Street, Subiaco WA 6008 Western Australia to Unsubscribe: http://esp.gewru.com/forms/u/63ed4a6/12414/1784995347.html ---------------------------------------------------------------------------



Products & Services | Jobs