Companies: CDN   

As foreshadowed in the latest issue of Growth Company Investor, Caledon Resources is seeking £26.5 million to help fund coal acquisitions.

AIM-quoted Caledon has returned from suspension today with details of agreements to buy two coking coal projects in Australia: Queensland's underground Cook Mine, with a 126 million-tonne resource, and the nearby Minyango deposit, host to a potential 205-500 million tonnes. The company, which is simultaneously exiting from its original Chinese gold exploration projects, is also buying Mining Technology Partnerships, holder of rights to technological processes to be used at Cook and Minyango.

The cost of the three proposed acquisitions is equivalent to £50 million, including £17.5 million for Minyango. Caledon, steered by chief executive George Salamis, is using nominated adviser and broker Canaccord Adams to raise £26.5 million of this total at 8p – above its recent 5.88p suspension price and the 7.25p to which the shares have rallied today – and is using loan stock and shares to fund the rest.

The company is paying nearly £20 million for the Cook Mine, where it says it expects coal production to reach 1.8 million tonnes a year in three years and claims a net pre-tax present value of £135 million. The deal involves the issue to Cook's vendor, the Xtrata mining giant, of a £6.25 million nine per cent convertible loan note.

Caledon came to the market in 2000 at 35p as a China gold play. Salamis sounds enthusiastic about the coal projects he has acquired and the shares represent a punt that he is right.