Colonial Coal International Corp. (TSX VENTURE: CAD) on Oct. 20 announced that it has entered into a letter agreement with an investor group that covers a proposed private placement of units of Colonial Coal together with the corresponding granting by the corporation to the investor of an option to acquire a 10% registered and beneficial ownership interest in the Flatbed Property.
That property will become available to the investor upon the successful completion of the private placement.
David Austin, Colonial Coal President and CEO, stated: “I am very pleased that we have been able to identify a potential long-term partner for the development of the company’s various property and business interests. We are hopeful that this partnership will continue to grow as Colonial Coal explores its many options going forward.”
Closing of the private placement is subject to a number of conditions, including receipt of all necessary corporate and regulatory approvals, inclusive of that of the TSX Venture Exchange. If this deal goes through, the investor will be entitled to the immediate appointment of one member to the Colonial Coal Board of Directors.
Upon the successful completion of the entire private placement closing the investor shall immediately acquire an option, exercisable within 90 calendar days of execution of the letter agreement, to acquire a 10% registered and beneficial ownership interest in those certain coal licenses that together comprise the Flatbed Property located in the Liard Mining Division in Northeastern British Columbia, Canada. This acquisition is expected to close before year end.
Upon the successful completion of the acquisition closing, it is presently intended that much of the private placement and acquisition proceeds will be utilized by Colonial Coal to complete a planned and mutually agreed upon exploration program on the Flatbed Property.
Colonial Coal is a publicly traded coal corporation in British Columbia that focuses primarily on coking coal projects. The company noted that the northeast coal block of British Columbia, within which its projects are located, hosts a number of proven deposits and has been the subject of M&A activities by companies like Xstrata, Walter Energy and Anglo-American.
Incidentally, U.S.-based Walter Energy some time ago shut down its active coal mines in western Canada and earlier this year sought Chapter 11 bankruptcy protection.