EQiTX signs conditional agreement to acquire S. Kalimantan coal miner
Monday, December 24 2007 - 01:03 AM WIB
The Board of Directors of EQiTX Limited is pleased to announce it has signed another binding Term Sheet with PT Mega Coal Indo Mine (Mega Coal) that will enable EQX to take a 51% interest in the net profits from production of coal from a number of Indonesian minerals permits. This Term Sheet is in addition to the Term Sheet signed and announced on 29 October 2007 meaning that this acquisition would add to the companies previously announced acquisition of a 70% interest in the net profit of coal in three other Indonesian mineral permits, details of which are fully outlined in the 29 October 2007 announcement. As previously advised, and subject to shareholder approval, the Company will in due course change its name, Board and Management to reflect this new line of business.
Background on Permits
The project area of approximately 200Ha in South Kalimantan has previously been developed and mined, but the licences have expired and are currently in the process of being reissued to Mega Coal. It is estimated that a significant deposit exists within the project area, which is in close proximity to suitable barge port areas and to the open sea. Logistically, the project area is well situated to allow straightforward trans-shipment operations with a very short haul by barge.
Details of the Terms Sheet
The material terms of the binding Terms Sheet are as follows:
? EQX will acquire the rights to 51% of the net profits generated from the production of coal from the Indonesian mining permits.
? EQX will pay a deposit of $US2 million to Mega Coal within the next one week of the confirmation that the Exploration Licence in relation to the Asset has been officially issued to a properly constituted Indonesian PT Company (?PT Company?) owned and controlled by Mega Coal. This deposit will be fully refundable if:
? EQX is not able to prove up reserves of at least 50 million tonnes of coal at a strip ratio of less than 5:1 within the asset area and with a minimum calorific value (CV) of 5300 gross air dried (GAD), within eight months of the signing of the Term Sheet during which the Company will carry out its due diligence; or
? If Mega Coal is found not to be the owner of the Exploration & Mining Licences; or
? EQX is not satisfied with the outcome of a Legal due diligence process designed to ascertain the legal standing of the Exploration & Mining Licences and the clearance of any legal issues or legal action to which those licences or the PT Company might be a party
Suitable security arrangements for the recovery of the deposit have been put in place by EQX.
In addition:
? EQX will pay $US5 million fully refundable amount for the issue of the Exploitation Permit to the PT Company. This amount will remain in escrow until the earlier satisfaction of all conditions precedent or commencement of mining operations by EQX.
? A further $US18 million paid on completion on the three above conditions.
? EQX will carry out detailed legal and technical due diligence on these permits (at a cost of up to $US100,000) to verify the information provided to the Company regarding the prospectivity and ownership of the mining permits.
? Capital Investment Partners (CIP) will work with EQX to raise an initial $A14.5 million which wilt be used to fund the initial deposit on the permits and the due diligence costs. These funds will be raised at the equivalent of $0.20 per share by a converting loan. The converting loan will be converted to EQX shares assuming the conversion of the loan to shares is approved by shareholders at an upcoming General Meeting which will be held on or around 31 January 2008. (end of edited excerpt)