As per the terms of agreement, African Energy will acquire all the shares in Aviva’s subsidiary Botswana Energy Solutions that in turn holds ownership of Mmamantswe Coal holding the project.

Also, the agreement is subject to completion of due-diligence on the project by African Energy by 3 May 2013.

Meanwhile, Mmamantswe Coal that has the right to earn a 90% joint venture interest in the license under a Heads of Agreement with Mawana Minerals is currently negotiating to acquire 100% of the license, the company added.

Commenting on the sale, Aviva chief executive officer Lindsay Reed noted that the cash proceeds from the sale would increase the company’s cash position besides raising shareholders value.

"We believe the coal sector in Botswana will now be driven forward through a combination of smaller domestic power stations and access to export coal markets for which a consolidation of resource ownership is required to drive infrastructure investment and
unlock value," added Reed.

African Energy, however, is seeking funds to finance the acquisition.