Modun Resources has signed a conditional agreement to sell the Nuurst Coal Project for a total potential consideration of US$8 million. A second unsigned conditional offer from a competing party is also being considered.
The company has spent 2014 investigating ways to extract value from its 100%-owned thermal coal deposit, be it via development, joint venture or sale. Modun has entertained discussions with a number of partners and acquirers during this period and had now reached a highly conditional agreement with a Mongolian based company.
Following the company’s announcement on November 24, it received the following day the US$100,000 exclusivity fee from the Mongolian based purchaser. This triggered the 90-day exclusivity period during which the purchaser has the right to conduct due diligence on the Nuurst project and enter into a binding agreement consistent with the key commercial terms outlined in the November 24 announcement.
Modun also confirms that subsequent to the November 24 announcement and before receipt of the exclusivity fee, it received another offer from a third party, which the directors were in the process of assessing. In accordance with its existing binding agreement, upon receipt of the exclusivity fee, the company is now unable to enter into or maintain commercial discussions with that third party during the exclusivity period.
The sale of the company’s interest in Modun Resources LLC, which owns the Nuurst project, is subject to the receipt of shareholder approval. The consideration of $8 million is payable in US$1 million in cash and US$7 million in deferred (royalty) payments, paid on the basis of US$0.50 per tonne for the first 14 million tonnes of coal extracted and sold by the purchaser.
The company has been reviewing a number of potential acquisitions from which to grow shareholder value and will continue to do so.