Cobalt Coal Ltd. (TSX VENTURE: CCF) said Dec. 19 that it has closed on the Virginia property acquisitions that were the subject of several press releases issued during the course of 2012.
These deals involve the acquisition of metallurgical coal bearing leases in Virginia, which were the subject of a National Instrument 43-101-compliant technical report entitled “Resource and Reserve Evaluation Including Pre-Feasibility Study, Steinman/ACIN Leases, Dickenson County, Commonwealth of Virginia, USA,” which Cobalt filed with Canadian regulators in November.
One of the tracts, called Mill Creek, is permitted for production and has received approval for construction of a coal prep plant.
In connection with the closing of the acquisitions, Cobalt received a loan of C$700,000 from a non-arm’s length party which was used to fund the amount payable at closing. Additionally, the closing particulars are summarized as follows:
- A payment of C$700,000 was made to the vendors in connection with closing; and
- A promissory note in the amount of C$13,250,000 was granted to the vendors on Dec. 19 that bears interest at a rate of 5% per annum.
As part of the property acquisitions, Cobalt said it has committed to:
- drill five test holes to additionally evaluate the coal bearing strata on the leased lands by July 31, 2013; and
- spend a minimum of C$500,000 on mine improvements on the Mill Creek tract before July 31, 2012, with a minimum of C$250,000 having been spent before May 31, 2013.
Additionally, Cobalt has committed to pay a finder’s fee of US$586,000 to an arm’s length party in connection with the acquisitions. US$136,000 of the finder’s fee will be paid in cash and US$450,000 will be paid in common shares in the capital of Cobalt to be issued at a deemed price of C$0.05 per share. The payment of the finder’s fee is subject to TSX Venture Exchange approval.
Cobalt is a publicly traded coal exploration and production company headquartered in Calgary, Alberta, Canada, with a regional office in Welch, W.Va. Its Westchester deep mine in McDowell County, W.Va., was featured in the reality TV series “Coal.”