BlackGold Natural Resources has entered into a non-binding term sheet for the proposed acquisition of the entire issued and paid-up share capital of Tengri Coal and Energy (TEC) from MGL Development (MGL) for $1 billion via a reverse take-over.

TEC owns the entire issued and paid-up share capital of Tengri Petrochemicals (TPL), which holds mining licences issued to mine coal deposits in Bayan soum, Tuv province, Mongolia. In addition, TPL’s wholly-owned subsidiary Tsaidam Energy holds licences for the construction of power plants and energy facilities in Mongolia. 

The purchase price of $1 billion shall be adjusted based on an independent valuation of TEC and assets held by the group (including its power plant licence, offtake agreements and indicated and inferred mineral resources) to be commissioned by BlackGold.

Under the term sheet, it is also agreed that BlackGold shall have an indicative ascribed value of US$150 million ($202.5 million), to be adjusted based on an independent valuation of BlackGold and assets held by the company to be commissioned by BlackGold.

New ordinary shares in BlackGold will be issued to MGL to satisfy the purchase price, calculated based on the final ascribed value of BlackGold divided by the number of shares in issue immediately preceding completion.

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Following the transaction, MGL will become a controlling shareholder of the BlackGold.

In a press release dated April 9, BlackGold states that the proposed acquisition will enable the group to diversify and expand its geographical footprint beyond Southeast Asia, while also allowing the group to vertically integrate its coal supply chain from mining to electricity power supply.

SEE:BlackGold shares surge 66.7% following proposed strategic collaboration and acquisition from S Lad Group

As TEC may be eligible for a mainboard listing on the Singapore Exchange (SGX), BlackGold states it intends to seek a transfer of its listing from the Catalist board to the Mainboard, concurrent with the completion of the proposed acquisition.

Philip Soh, chairman of BlackGold, says that the acquisition is transformational for BlackGold and it will enable ut to gain market access to resource-rich Mongolia.
"While continuing our resource-related activities in Indonesia, this acquisition is consistent with our strategy of pursuing growth, allowing us to create new value propositions to meet the growing demand of energy in our targeted markets," he says.
Philip Moynagh, CEO of the energy business at TEC, says "[TEC group's] assets include over half a billion tonnes of coal, licences and designs for state of the art power plants, licences and designs for thousands of kilometers of transmission infrastructure, offtake agreements for the generated electricity, construction and debt agreements with Chinese state owned enterprises, and equity agreements with a US investment company. The first 600MW project, a US$860 million capital expenditure project, is now ready for groundbreaking."
"In BlackGold, we’ve found a perfect energy supply chain strategic partner. With a Singapore listing, we enable acceleration of more energy supply projects for the energy constrained economies of Asia. We are truly excited by this next step," he adds.
Shares in BlackGold closed flat at 1.6 cents on April 8.