8th Mar 2016 10:42
LONDON (Alliance News) - Coal of Africa Ltd Tuesday said it will dispute the validity and defend itself against claims it has breached an agreement and needs to pay USD19.0 million immediately as a result.
Coal of Africa said it has received a notice from Rio Tinto Minerals Development Ltd and Kwezi Mining Pty Ltd alleging the London-listed company is in breach of an obligation under the agreements covering Coal of Africa's acquisition of interests in Chapudi Coal Pty Ltd and Kwezi Mining Exploration Pty Ltd.
The interests relate to assets within the Greater Soutpansberg project, Coal of Africa said.
Rio Tinto Minerals, part of London-listed Rio Tinto PLC, and Kwezi Mining claim Coal of Africa must pay all the outstanding amounts owed to them following the alleged breach, but Coal of Africa said it plans to continue paying the outstanding amount to the pair over the next year and a half.
The original amount owed by Coal of Africa and its subsidiary was USD75.0 million, of which USD56.0 million has already been paid.
Coal of Africa said the remaining USD19.0 million only needs to be paid before June 15, 2017, and plans to defend the claim made by Rio Tinto Minerals and Kwezi Mining that that sum needs to be paid in full immediately.
Coal of Africa said it has taken legal advice and plans to "dispute the validity of the notice", and said it will "defend it vigorously" should the pair take further action.
"Coal of Africa and MbeuYashu [the company's subsidiary] have met, and will continue to meet all of their payment obligations to Rio Tinto and Kwezi," said the London-listed company.
Coal of Africa shares were up 4.5% to 2.22 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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