Johannesburg-listed Keaton Energy has made an A$19.6 million ($17.6 million) takeover offer for Australia-listed Xceed Resources, in an attempt to grow into a more than 5 million mt/year producer of South African thermal coal, Xceed said in a statement Monday.
Under the takeover arrangement, Xceed would become a wholly owned subsidiary of Keaton and would be delisted from the Australian Securities Exchange if its shareholders accepted Keaton's offer for the company of A$0.14/share.
Keaton's offer represents a 35% premium to a volume weighted average price of Xceed's share price over the past 30 trading days, Xceed said.
Xceed's managing director Ian Culbert, finance director Frank Belben and non-executive chairman Patrick O'Connor together with other Xceed shareholders representing 57% of the company's share capital have voiced support for Keaton's takeover offer.
Oil and commodities trader Gunvor, a 23.9% shareholder in Keaton, will provide between $10 million and $18 million of the purchase price of Xceed, according to Xceed.
Gunvor entered the coal trading business in 2009 and has acquired stakes in a number of coal mines including Signal Peak in Montana, and has interests in some eastern Siberian coalfields prospective for coking coal, according to the company's website.
Xceed has three coal projects in South Africa with total coal resources of 72.8 million mt on a measured basis, and its largest coal project is its 74%-owned Moabsvelden thermal coal open-cut mine with a measured coal resource of 63 million mt, which is due to begin production as early as mid-2014. The company's first mining lease in South Africa had been granted recently.
Keaton "will use its experience in opencast mining and coal processing to develop and operate the [Moabsvelden] asset," Xceed said.
Keaton has two operations in Africa -- the Vanggatfontein Colliery in Delmas, in the province of Mpumalanga, and the Vaalkrantz Colliery in Vryheid, in the province of KwaZulu-Natal. Vanggatfontein produces thermal coal for Eskom and metallurgical coal for domestic industrial consumers, while Vaalkrantz produces anthracite for domestic consumption and export to Brazil.
Xceed's share price closed Monday 13.6% higher day on day at A$0.125/share on the ASX.
