Hodges Resources, the Australian Stock Exchange (ASX) quoted junior explorer, is embarking on a major cash raising exercise to meet obligations of taking a large stake in both Morupule South and Moiyabana coal fields as it tries to build-up its assets.
The company is pleading with shareholders to approve 18 million shares in a bid to raise A$ 5.8 million at its general meeting that will be held next month in Perth , Australia.
The meeting has been called for May 10, 2011.
In a statement issued Monday, the company passionately urged shareholders to approve the cash raising plan, stating that proceeds will be used to meet obligations set under the tentative agreement aimed at acquiring the two assets.
“The net funds raised will be used to provide for the cost of acquisition of the Morupule South Coal Project and for the continued exploration on the Morupule South and Moiyabana Coal projects …” the company said.
Last month, Hodges announced that it has entered into two separate agreements related to Morupule South and Moiyabana coal projects, respectively.
The Morupule South coal project agreement provides that Hodges can earn up to 99 percent interest in a strategic project with a target of 1.4 billion tones.
The Morupule South Coal Prospect is adjacent to the operational Morupule mine and Colliery, which is the only operational coal fired power plant in Botswana.
Located within the eastern central district of Botswana, the Morupule South Coal prospect joint venture has significant mineable coal seams within the area supported by work completed by the current owner and the neighbouring companies and a preliminary report undertaken by GEMECS.
Importantly, the project areas have had minimal exploration and coal quality analytical work. To Hodges’ knowledge no coal washing investigations have been made.
Botswana has extensive unexploited coal resources estimated to be in the order of 212 billion tonnes, making it one of the most coal rich countries in Africa.
Under the agreement Hodges can initially earn 75 percent by paying US $500,000 cash and further spending US $ 3 million over a period of two years. The money will be used for exploration purposes and after that, it is expected to register a joint venture company in Botswana that will hold the mining permit.
Meanwhile, under the Moiyabana coal project, it can earn up to 90 percent but that agreement is subject to a due diligence that the company will conduct on assets, which is currently 100 percent held by Jaguar Ventures.
The due diligence exercise is expected to continue until May 13, this year and if it is interested to continue with the deal will spend a further US $ 6-9 million before settling down US $70 million bill for acquiring 90 percent of the asset.
The company said in a statement that “the directors recommend that shareholders vote in favour” of a resolution that gives the directors some flexibility to issue more shares above the ASX stipulated 15 percent of ordinary shares within a 12 months period without seeking shareholders’ approval.
