The assets include an approved mining right and overlaying surface rights. Sitatunga signed an agreement to buy the Leeuw Braakfontein Colliery from the JSE-listed mining company Wescoal.
Braakfontein Colliery is an advanced-stage exploration property situated on the Klip River Coalfield, which is located about 10km from the town of Newcastle. The area has a potential for coal extraction through open cast mining at the initial phase as well as underground mining at a later stage.
Arne Hansen, managing director of Sitatunga, says he and his team are excited about the prospect of converting the potential at Braakfontein into an owned and managed mining operation.
Hansen says, “As a start, it’s a good investment for us. We are therefore looking forward to starting operations as soon as everything has been cleared by regulators. We believe our investment will create much-needed jobs and bring about development in the area.”
The offer by Sitatunga to buy the assets came at the right time for Wescoal which was looking at disposing of its non-core assets to fund future growth, according to a statement to its shareholders.
Sitatunga Resources’ largest shareholder, Menar Holding, wishes to build on its existing businesses including Canyon Coal and Zululand Anthracite Colliery, through this growth vehicle called Sitatunga Resources.
Hansen adds, “We will benefit from the experience in responsible investing, where the focus is simultaneously on growth, job creation and environmental care. We have a positive outlook of mining in South Africa.”
The deal is subject to regulatory approvals.