Expansion of South African coal Portfolio

    RNS Number : 7871A
  South China Resources PLC
  06 August 2008
   
South China Resources Plc / Index: AIM / Epic: SCR / Sector: Natural Resources
 
06 August 2008
South China Resources PLC (*SCR* or *the Company*)
to expand its South African coal Portfolio
 
Highlights:
 
�    Option agreements to permit purchase of a 100% beneficial interest in Vlakplaats open pit coal project and a 35% beneficial interest in
the Camden coal project
�    Vlakplaats Coal Project:
o Shallow, largely open pit prospect, containing predominantly export A-grade thermal coal resources as well as some domestic grade thermal
coal
o Contains JORC inferred resources of 178Mt gross in-situ tonnes - 100% attributed to SCR
o Abuts the Company*s previously announced Elof Coal Project
�    Camden Coal Project:
o Contains up to five coal seams, including the B and C Seams which are the most widely exploited coal seams in the Ermelo Coal Field and
primarily used for domestic and export thermal product.
o Located approximately 200km SE of Johannesburg, in close proximity to the Camden Power Station
o The Board believes area to have the potential to host a significant coal resource
�    Following transactions, SCR raises JORC compliant attributable coal resource to circa 240Mt over contiguous licences in coal producing
region 
 
Introduction
South China Resources plc announces that its 100% owned South African subsidiary has acquired an exclusive option to acquire 100% of the
Vlakplaats prospecting rights from Universal Pulse Trading 132 Pty Ltd *UPT*.
 
This transaction will form part of a previously announced reverse takeover under the AIM Rules and re-admission is subject to shareholder
approval. The transaction will also require Ministerial consent to the transfer of the prospecting right from UPT to the Company's South
African subsidiary.
 
The Company is in receipt of an Independent Competent Persons Report (*CPR*) report on The Vlakplaats Coal Project in South Africa (*the
Project* or *Vlakplaats*), which was completed by global mining consultancy RSG Global Coffey Mining (S.A.) Pty Ltd (*RSG Coffey*).
 
About the Vlakplaats Coal Project
Located in the Witbank Coal Field some 65km E of Johannesburg, the Vlakplaats Coal Project, which comprises the Vlakplaats and Wolvenfontein
areas, contains predominantly export quality thermal coal suitable for international markets. The project abuts the Elof Coal Project, which
SCR, as announced on 1 May 2008, has conditionally agreed to acquire, to the West.
 
The Witbank Coal Field is economically the most important in South Africa and of the 5 defined coal seams exploited in the Witbank Coal
Field, the Vlakplaats Coal Project contains an abundance of Seam 2 and Seam 4 which are the most widely exploited coal types, primarily used
for domestic and export thermal product.
 
The Vlakplaats Coal Project consists of a contiguous area, including the farm Vlakplaats No 268 IR, Portions 4, 5 and 6 and the Remaining
Extent of the farm Wolvenfontein 244 IR and other minor areas held under prospecting right MP30/5/2/1/1520PR).
 
    
 Vlakplaats Coal Project Resources as calculated by RSG Coffey are as follows:
 Area                 Gross In situ t    Mineable In-situ t    Classification     Gross in Situ t to
                                                                                      Company (100%)
                                                                                                    
 Wolvenfontein                                                           JORC                       
 Seam 2                    74,663,303            50,397,730          Inferred             74,663,303
 Seam 4                       705,540               476,239          Inferred                705,540
                                                                                                    
                           75,368,843            50,873,969          Inferred             75,368,843
                                                                                                    
 Vlakplaats                                                              JORC                       
 Seam 2                    23,081,000            13,848,000          Inferred             23,081,000
 Seam 4                    80,371,000            48,222,000          Inferred             80,371,000
                                                                     Inferred                       
                          103,452,000            62,070,000                              103,452,000
                                                                                                    
 Grand Total              178,820,843           112,943,969          Inferred            178,820,843
 
The Company intends to rapidly advance the JORC inferred resources at Vlakplaats to a JORC measured category with a view to establishing
open pit mining operations as soon as is practicable.
 
The Vlakplaats Transaction
The Company has acquired the right to acquire a 100% interest (*the Vlakplaats Option*) in the Vlakplaats Coal Project. As consideration the
Company will, upon registration of the prospecting right in the name of UPT in the Mining Titles and Registration Office, pay to UPT a
non-refundable deposit of R3.5m (circa �250,000). The Company shall then receive an exclusive option period of 90 days from the date of
registration of the prospecting right.
In view of its size, the acquisition is a reverse takeover (as defined in the AIM Rules for Companies) for the Company and is therefore
subject to the approval of its shareholders. A circular containing full details on the Vlakplaats Coal Project as well as the Elof Coal
Project will be sent to shareholders in due course.
 
Should the Company exercise the Option, the consideration payable to UPT will be R350m (circa �25m) in cash, payable upon registration of
the transfer of the prospecting right to the Company. The Company is considering a number of sources of funding for the acquisition in the
event that it exercises the Vlakplaats Option, which are likely to result in the issue of new ordinary shares in the Company.
 
A facilitation fee of �2,000,000 shall be payable to the introducers of the Vlakplaats Project to the Company. It is proposed that the
facilitators shall utilise these funds to subscribe for ordinary shares in the Company.
 
About the Camden Coal Project
Located in the Ermelo Coal Field some 200km SE of Johannesburg, the Camden Coal Project, is nearby the Camden Power Station, some 10km S of
the town Ermelo.
 
The project comprises the farms Kromdraai 441 IS, Drinkwater 443 IS, De Goede Hoop 473 IS and Burhmansklipkrans 331 KT (excluding portion 1)
held under new order prospecting rights and measuring approximately 15000 Ha.
 
The Camden Coal Project contains up to five coal seams, including the B and C Seams which are the most widely exploited coal seams in the
Ermelo Coal Field and primarily used for domestic and export thermal product. To date no JORC or SAMREC compliant coal resources have been
defined at the Project but due diligence of historical data is underway and the Board believes the area may have the potential to host a
significant coal resource.
 
The Camden Transaction
The Company has procured the right to acquire, prior to 30 September 2008, a 35% interest (the Camden Option*) in the Camden Coal Project
from Continental Coal Limited (*Continental*). As consideration the Company will pay to Continental a non-refundable deposit of US$100,000
upon satisfactory completion of due diligence on the Camden Project.
 
The Company has been granted the right to inspect the prospecting rights and intends, in conjunction with Continental, to conduct a limited
technical drilling program over the project in the coming weeks.
Should the Company exercise the Camden Option, the Company shall form a joint venture company with Continental in order to explore for coal
resources on the Camden Project. The consideration payable to Continental will be R9.25m (circa �640,000) in cash, payable upon registration
of the transfer of the prospecting rights to the Joint Venture. Furthermore the company would transfer R10m (circa �690,000) to the Joint
Venture Company to fund an agreed exploration programme over the Camden Project. A facilitation fee of 5 Million ordinary South China shares
shall also be payable to the introducers of the Camden Project to the Company.
 
The Company will also retain the right to purchase a further 15% beneficial interest in the Camden Project on terms to be agreed in the
future.
 
Conclusion:
South China Resources is pleased to report that it is in negotiations with holders of other South African mining assets and hopes to be able
to update the market as to these transactions shortly.
 
The Company has begun negotiations with potential end users of sea-borne A grade export thermal coal regarding appropriate funding for these
transactions.
 
The Board is confident that these premium projects can attract funding in a manner that will avoid excessive dilution and provide
significant reward to existing shareholders.
 
For further information please contact:
    
 Tim Horgan                              South China  Tel: +44 (0) 20 7493 7671
                                       Resources Plc
 Hugh Oram                       Nabarro Wells & Co.  Tel: +44 (0) 20 7634 4700
                                                 Ltd
 Hugo de Salis/Victoria Thomas     St Brides Media &  Tel: +44 (0) 20 7236 1177
                                             Finance
 
 
 
 

This information is provided by RNS
The company news service from the London Stock Exchange
 
  END 
 
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