GVM raises £14 million for takeover
Article Date: Apr 10 2007Coal play GVM Metals has raised £13.7 million to help fund buying Kelso Resources, with mineral interests in Africa and Asia.
AIM-quoted GVM, chaired by entrepreneur Richard Linnell and run by managing director Simon Farrell, has raised the money at 34p, a 21 per cent discount on yesterday's price, to fund the purchase of an indirect stake in South Africa's Mooiplats coal prospect, with a potential for more than 450 million tonnes, only two kilometres from the Camden power station and beside the railway to the Richards Bay coal terminal.
The placing, handled by joint-brokers Blue Oar and Mirabaud, will fund the purchase of Kelso Resources, which has an option to buy 70 per cent of Coal of Africa, owner of Mooiplats as well as the Itawe nickel project in the Philippines.
The deal, which requires ratification by GVM shareholders next month, is conditional on directors deciding it is worth Kelso’s while exercising the option over Coal of Africa, provided a coal resource in the region of 450 million tonnes is established, conforming to JORC mining industry standards.
GVM has also received South African ministerial approval to proceed with the Baobab coal project, clearing the way for the acquisition of yet another company, Motjoli Resources, and to pursue interests in Limpopo and Holfontein as well.
GVM shares, recommended by Growth Company Investor at 14p last June, now stand at 41.5p, 2p down on the 34p placing news. Some profit-taking might be prudent, but long-term potential remains.
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