Nava Bharat buys major chunk of Zambia coal mine

Nava Bharat (Singapore) Pte Ltd said on Monday it has signed a share sale and purchase agreement (SPA) for acquiring 65 per cent equity stake in Zambia's Maamba Collieries Ltd (MCL), with the government of Zambia holding the ''golden share''.

Nava Bharat (Singapore) is a subsidiary of India's Nava Bharat Ventures Ltd, diversified entity with its main interest in power generation. In a communication to the Bombay Stock Exchange, it said a group of individuals (collectively called the Zambian Consortium) joined NBS to form Nava Bharat Consortium.

The acquisition was made pursuant to the selection of Nava Bharat in a global tender issued by a ZCCM, a state-owned Zambian entity, in late 2008 for inducting a private majority partner.

The SPA sets out certain conditions precedent (CPs) for completion of the transaction, envisaged by February 2010. It involves a ''bankable power purchase agreement and an investment promotion and protection agreement which are critical to the proposed investment'' form part of the CPs for the transaction.

Nava Bharat and ZCCM are committed to optimise the mine operations to obtain positive cash flows soon and to establish a 2x150 mw power plant using low grade coal from the coal mine, which has reserves of about 65 million tonnes of washed high grade coal and an equivalent amount of low grade coal for use as the feedstock for the proposed power plant.

The overall integrated project entails capital outlay of about $550 million, to be funded by non-recourse project debt and equity.

Nava Bharat's share of equity for this integrated project is about $108 million and that of ZCCM is about $57 million. Actual commitment will vary upon finalisation of the project cost and financing structure, the statement said.