Australia Stock Exchange -listed Queensland Bauxite on Tuesday announced that it would buy an interest in two Mozambique coal exploration licences in the Zambezi basin, close to majors such as Vale and Rio Tinto.
The junior said it had signed a binding term sheet with Australian unlisted company Regius Coal Mining to acquire an initial 35% interest in its subsidiary, Regius Coal SPV, which held interests in two exploration licences in the Tete province, for $750 000.
Eighteen months after completion of the initial subscription, Queensland Bauxite would have the right to subscribe for a further 16% of the issued share capital in Reguis Coal for an aggregate amount of $1.2-million in one or more tranches, with the percentage interest that it acquired in Regius Coal SPV being adjusted to 51%.
Upon completion of the transaction, Queensland Bauxite and Regius Coal, as joint venture partners, intended to progress coal exploration activities over the 4 600 ha 4070L and the 16 000 ha 4169L licence areas.
Regius Coal currently held an 80% interest in the 4070L licence and the right to acquire up to 85% interest in the 4169L licence, as well as interests in other Mozambique exploration licences.
The transaction remained conditional upon, among others, Regius Coal completing the restructuring of its holding in the Regius Coal SPV portfolio, so that the interest in the licence, the subject of that portfolio, was legally and beneficially owned by the Regius Coal SPV.
The attractiveness of the Zambezi coal basin was owing to the large scale of coal deposits, with 22-billion tonnes of coal having been discovered to date and with exploration activity still at an early stage and further resources to be proven in coming years.