EastCoal Inc (CVE:ECX) continued to go down after the company said they intend to buy a producing coking coal mine in the Ukraine.
ECX stock price lost another 1.25% on Thursday, generating a significant trading volume of nearly 840 thousand, which shows that tension is rising. The stock has lost nearly 16% this week.
The sell-off was basically a reaction to the news, although it appeared as though some informed traders sold off beforehand.
The company said in a press release on Tuesday that EastCoal has entered into a letter of intent with Aponet Enterprises Ltd. to acquire the right to purchase Menzhinsky mine in the Ukraine.
The mine is currently operational, producing coking coal. It is viewed as a possible strategic fit to the company’s Verticalnaya anthracite mine, which is still under construction and awaiting reactivation.
The price for the mine will total $3.75 million in cash, 4 million common share purchase warrants issued to Aponet, convertible at 70 cents per share and $4 million convertible note exercisable at 65 cents per share. The company will also have to assume and pay a debt obligation of $7 million over a three-year period.
The deal will not commence until a technical report is ready. It is expected to commence in October.
