TerraCom acquires stake in Universal Coal with $35m investment

Kangala Colliery in South Africa. Image: Universal Coal.

TerraCom has secured a binding agreement to purchase a substantial shareholding in Universal Coal.

TerraCom has acquired approximately 19.9 per cent of Universal’s issued capital from Coal Development Holding for a combination of cash and TerraCom shares.

The company purchased more than 104 million shares in Universal for about $34.6 million, including $17.3 million in cash and around 34.2 million fully paid ordinary TerraCom shares at a deemed issue price of $0.5061.

Universal provides its investors with exposure to coking and thermal coal assets across South Africa’s major coalfields, including Kangala, New Clydesdale, North Block Complex, Ubunto, the Eloff project, Arnot South and Berenice/Cygnus.

The acquisition aligns with TerraCom’s corporate strategy of entering into an emerging market while reducing its sovereign risk profile with new investments in South Africa.

TerraCom chairperson Wal King said the investment was significant for the company.

“Universal’s asset portfolio provides the company with greater geographic diversification and an expanded production footprint,” King said.

“The growth achieved under the guidance of chief executive officer Tony Weber throughout the past few years has been exceptional.”

Universal has a positive outlook for growth, increasing its sales to 8.4 million tonnes by June 2020 and 9.6 million tonnes for the 2021 financial year.

The agreement should be settled on or around October 30.

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