GMR Energy, the energy division of GMR Group, has picked up a 5% equity
stake in mining company Homeland South Africa (HSA) for a consideration
of $15 million. As per the deal, GMR would have an option to acquire
45% stake in the company at a later date for $145 million.
If the option is exercised by September 2, 2008, the total transaction value would be $155 million for the purchase of a total 50% stake, a company source said. The South African company is a subsidiary of Torontobased Homeland Energy Group that has coal and uranium mining interests in Southern African countries and Canada. The deal is significant for GMR as this would would give its an access to HSAâ€™s mining properties in South Africa. Its properties in the country includs the Kendal Mine, Eloff coal mining project, the Northfield site reclamation project. According to a source, the deal may help GMR to explore the possibility of setting up a power project within South Africa as coal produced from HSAâ€™s mines could be easily made available to it.
The present transaction, however, excludes Homeland Energyâ€™s interests in Homeland Uranium, Altona Resources and other projects under consideration in South Africa. The coal project is expected to generate a production of 13 to 15 million tonne (MT) per annum. GMR would have access to 50% of this production that could be brought to India for use in companyâ€™s coastal power projects.
The present transaction represents GMRâ€™s strategic move to expand its energy initiatives internationally. It would facilitate its initiative towards backward integration and provide a platform to launch a coal-based international energy initiative. GMR currently has two coal-based power projects on hand.
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