Riversdale Mining Limited (ASX: RIV) has signed a non‐binding Memorandum of Understanding („MoU") with Wuhan Iron and Steel (Group) Corporation („WISCO") and a logistics partnership agreement with the China Communications Construction Company ("CCCC") for the development of the Zambeze Coal Project („Zambeze") in Mozambique.
- MoU signed with Wuhan Iron and Steel Corporation (WISCO)
- Logistics partnership agreement signed with China Communications Construction Company (CCCC)
- Contribution of US$800 million for 40% participation, values Zambeze Coal Project at US$2.0 billion
- WISCO to subscribe for an 8% equity stake in Riversdale
- Secures investment as well as logistics and infrastructure expertise
The MoU provides for the acquisition by WISCO of 40% of the Zambeze Coal Project (EPL 946L) in the Tete Province of Mozambique for a total consideration of US$800 million to be paid in three tranches and subject to achievement of certain milestones. When completed, the transaction values Zambeze at US$2.0 billion.
In addition, at the date of signing of the definitive agreements, WISCO will be issued 8.0% of the ordinary shares in ASX‐listed Riversdale Mining at an agreed price of A$10.00 per share.
The Zambeze Coal Project is Riversdale's second Tier 1 coal project in the Moatize Basin and is adjacent to the Benga Coal Project. The Zambeze Project is similar in structure to Benga with 22 coal seams outcropping over a strike length of 14 kilometres across the northern portion of the tenement. On 31 May 2010, the Coal Resource estimate for Zambeze was upgraded to 9.0 billion tonnes.
WISCO will earn the right to purchase at least 40% of the coking coal produced from Zambeze, and the right to purchase at least 10% of the coking coal produced from the Benga Project, in each case on market terms.
The MoU also covers the facilitation by WISCO, along with CCCC and other Chinese companies, of a comprehensive study of mine‐to‐ship logistics to enable the export of large tonnages of coal products from the Zambeze Coal Project to ports for export markets. WISCO will also facilitate the participation of a number of Chinese financial institutions in arranging the necessary project finance.About WISCO:
WISCO is a major Chinese steel and iron producer, located in Wuhan, Hubei, with an annual production capacity of some 40 million tonnes. In its steel business, the Group produces all types of products for domestic and international markets.About CCCC:
CCCC and its subsidiaries are principally engaged in the design and construction of transportation infrastructure, dredging and heavy machinery manufacturing business, including ports, terminals, roads, bridges, railways, tunnels, as well as civil work design and construction, capital dredging and reclamation dredging, container crane, heavy marine machinery, large steel structure and road machinery manufacturing, and international project contracting, import and export trading services.