Firms: Minter Ellison (Australian counsel to Power Origin Developments BVI), Sparke Helmore (Universal Coal), White & Case (Hong Kong counsel to Power Origin Developments BVI )
Deal: Power Origin to acquire equity in Universal Coal
Area: Minerals and resources
Value: Approximately $10 million
Key players: Minters corporate senior associate Michael Gajic led the transaction, together with partner James Philips. Michelle Segaert led for Sparkes, while Virginia Tam led for White & Case
Deal significance: ASX-listed Universal Coal plc has signed a private placement with Power Origin Developments BVI, an entity controlled by Hong Kong-based mining, minerals and resources investor Yat Hoi Ning. Power Origin will acquire equity in Universal Coal in two tranches, worth around $7 million and $3 million respectively. The placement gives Power Origin a 19.99 per cent stake in the company.
The deal means Universal Coal will have secured nearly half of the equity needs for its $50 million Kangala thermal coal project in South Africa. Kangala aims to produce 2.1 million tons of saleable coal annually from a pit around 65 kilometres from Johannesburg. The placement included a balanced suite of rights that secure the investor more than just a foothold in the issuer, allowing the investor to protect the strategic nature of its investment through input into governance and involvement in future equity raisings.
"Strategic placements such as this can benefit both parties, giving the investor involvement in the company's development and providing the issuer with access to capital and ongoing support,” said Gajic.
“They are an increasingly common approach for junior miners who are facing subdued commodity prices and tight access to capital markets."