Forbes & Manhattan Coal Corp. says it’s buying majority stakes in an operating coal mine and an undeveloped anthracite deposit in South Africa from Rio Tinto PLC.
Toronto-based Forbes & Manhattan will pay a total of about $52.3-million plus royalties to the Anglo-Australian mining giant, including $37.7-million when the deal closes and two followup payments.
The Zululand mine and the Riversdale deposit are about 230 kilometres from Forbes Coal’s Aviemore operations.
Rio Tinto has agreed to sell Forbes 100 per cent ownership of the shares and shareholder claims of Riversdale Mining Ltd. in Riversdale Holdings (Proprietary) Ltd. (RHPL).
As a result, Forbes & Manhattan will acquire 74 per cent interest in the Zululand and Riversdale anthracite collieries. The remainder will be owned by Black Economic Empowerment Partners.
Anthracite is a type of hard coal with high carbon content that burns relatively cleanly.
In addition to the initial payment, Forbes has agreed to pay variable payments based on saleable production levels in the two 12-month periods ending June 30 in 2013 and 2014. Each payment is estimated to be about $7.4-million.
In addition, Forbes has agreed to pay annual revenue share of 10 per cent on incremental revenue above $102-million , to be adjusted for inflation, until June 30, 2025.