October 07, 2008

GVM Metals to acquire 60% stake in SA Tshikunda Coal Project

Australian mineral processing and coal mining company GVM Metals Limited announced that it has executed a Heads of Agreement to acquire 60% of the issued capital of Tshikunda Mining Limited, a company owned by Basani Investments Limited and Ndilo Resources Limited which owns the Tshikunda Coal Project, a 32,000 hectares property situated between the Company’s Baobab project and Exxaro’s Tshikondeni coking coal mine.

Completion of both transactions will take GVM’s interest in the Tshikunda Coal Project to 60%. The consideration payable to acquire Tshikunda is ZAR 20 million (approximately AUD 3.5 million), subject to the following suspensive conditions:
1. Obtaining the necessary approvals in terms of section 11 of the Mineral and Petroleum Resources Development Bill of South Africa
2. Obtaining the requisite approvals of the South African Reserve Bank as are applicable
3. Obtaining any required approvals from the ASX.

Mr Simon Farrell MD of GVM said that the acquisition was an important development in the Company’s goal of becoming a major player in the development of the Limpopo coalfields. He said that “Whilst very limited work has been undertaken on the area in the past, it is now widely considered to be highly prospective as a significant source of hard coking coal. What is particularly exciting is that both Rio Tinto and ourselves believe the rank of coals improve eastwards of their Chapudi and our Baobab projects and given that the value of coking coal is now roughly double that of thermal coal, the dependence of a proximate power station to get the project up and running starts to disappear.”