South African thermal coal production company Continental Coal has entered into binding financing agreements with South African-based diversified mining company Village Main Reef.

Under the terms of the agreement, Village Main Reef is to acquire up to a 19.9% strategic interest in Continental Coal through a private placement and the purchase of investor shareholdings of parcels of shares with a market value of less than A$500, and through subsequent on market share purchases.

Continental Coal announced the placement of 100m shares to Village Main Reef at an issue price of A$0.08 per share, subject to shareholder approval being obtained at the company's general meeting on March 28th 2013 and approval from the South African Reserve Bank.

The group said that the funds raised would be applied to debt reduction, working capital requirements and overall strengthening of the company's balance sheet.

Don Turvey, Continental Coal Chief Executive Officer, said: "I am pleased to welcome the strategic investment and partnership that we have now established with Village Main Reef. The private placement and purchase of small shareholdings will have a significant impact on our business in the short term."

Village Main Reef Joint Chief Executive Officer Marius Saaiman said: "Our investment in Continental reflects Village Main Reef 's continued diversification strategy while maintaining our requirement to invest in strong, cash generating assets."

MF

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