The properties contain metallurgical coal bearing leases in Virginia, purchased for a total amount of $7m funded via a loan from a non-arm’s length party.
Among the acquired properties, the Mill Creek Tract has permits for production and has secured the approval for construction of a coal preparation plant.
Under the transaction terms, Cobalt Coal offered a promissory note for $13,250,000 to the Vendors dated 19 December 2012, bearing an annual interest rate of 5%.
Pursuant to the acquisitions, Cobalt Coal will undertake drilling at 5 test holes to further evaluate the coal bearing strata on the leased lands by July 2013 and invest $5m on mine upgrades on the Mill Creek Tract before 31 July 2012.
