The South African coal producer Coal of Africa (CoAL) has announced that it has entered into memorandum of understanding (MoU) with Kwezi Mining and Chapudi Coal (Chapudi), a joint venture between global mining giant Rio Tinto and Kwezi Group of South Africa.
Under the scope of the agreement, Chapudi is to grant access to and cede to CoAL ownership of certain rights and interests over several project areas (Farms) that border CoAL's Makhado Hard Coking Coal Project located in Limpopo Province. The action is not expected to add significant value to CoAL's project but also improves the economics of running the proposed five million mt per annum mining operation planned to commence in June 2009. In return, CoAL will cede the rights over certain Farms in the same province to Chapudi.
In addition, Chapudi and CoAL are to enter into a joint venture agreement in respect of prospecting rights over certain Farms owned by CoAL and Chapudi in the northern parts of Limpopo Province. Chapudi will be the operator of the JV.