Shares in Coal of Africa surged more than 16% today after it revealed a strategic tie up with a Chinese energy firm today.

A unit of coal producer Beijing Haohua Energy Resource is set to invest USD 100 million into the South Africa focused company through a proposed placing at 25 pence a share.

It comes after miner Exxaro has decided not to exercise its option to acquire a 30% stake in the company's Makhado coking coal project.

Coal of Africa has two operating collieries and two projects in early operations and development.

The placing is structured in two tranches and would allow HEI to subscribe for up to USD 100 million of shares in CoAL at 25 pence per share.

Afterwards HEI will own 23.6% of the company.

Coal's chief executive said the funds would expedite the development of its projects and lead to the formation of a strategic partnership and provide direct exposure to the world's largest coking coal market. He said that "The exchange of financial, technical and operational expertise will facilitate the growth and development of CoAL and the coking coal industry in South Africa.”

Source - Proactive Investors

(www.coalguru.com)