PERTH (miningweekly.com) – ASX-listed Rey Resources has signed a deal with Yuanrun Investment to divest of its Duchess Paradise thermal coal project, in Western Australia, for A$24-million.
Yuanrun will pay A$2-million to Rey within ten days of the agreement, with the payment treated as a nonrefundable deposit.
The company will be indebted to Rey for a further A$22-million, with the debt treated as a convertible loan on which Yuanrun will pay an interest in cash at a rate of 3% a year, payable on a quarterly basis.
Yuanrun will also provide a guarantor, whose appointment must be accepted by Rey, as a guarantee for the convertible loan.
“We are pleased to reach the agreement with Yuanrun who will fund all works of the Duchess Paradise project in future. The transaction will give the project access to the Hong Kong capital market for fund raising for future mine construction,” said Rey MD Wei Jin.
“The A$2-million deposit will help Rey to partially repay debt and to fund the development of other projects,” he said.
The Duchess Paradise project has a total Joint Ore Reserve Committee-compliant resource 305-million tonnes, and includes three exploration tenements. The project is some 175 km from Port Derby.