The purchase price would be be settled through the issue of 200 million new shares in Gilboa at an issue price of 5c a share, which represented a premium to the current market price, it said.

The issue of these shares would not result in a change in control of Gilboa.

The deal follows the acquisition of 100 percent of property holding company Waterkloof from Elizabeth de Beer, a director of Gilboa, for R3.67 million effective from the end of June.

Eddy de la Pierre, Gilboa's chairman, said on Friday the rationale for the acquisition was to inject assets, turnover and profit into the Gilboa group in the related areas of both property and mining, which continued to be the group focus.

Absolute Tiles started business in the first half of last year. It purchases local and imported tiles for resale to property developers. It has retail outlets in Pretoria East and Fourways.

The company owns 49 percent of Absolute Colleccions, in which black empowerment company Calulo Investments has a 51 percent stake.

Absolute Colleccions has applied for a prospecting permit for permission to mine slate, dimension stone and other sedimentary deposits.

De la Pierre said Absolute Colleccions' prospecting permit could be granted "in days", after which it would start with trial mining.

He added that it made sense for Gilboa to do a deal that was "smaller and capable of doing".

Empowerment group Ifa Lesizwe proposed to acquire a controlling interest in Gilboa for R50 million but this transaction floundered in April.

De la Pierre indicated there was nothing sinister in the fact that both the acquisitions Gilboa had concluded recently were related party transactions.

"Why look outside our expertise?" he said. "They [Serfontein] wanted to get involved in a listed vehicle and I have a listed vehicle that is struggling. It makes sense to put the two together."

De la Pierre added that Calulo Investments led the consortium that recently had acquired a 25 percent stake in Total South Africa.

He said there were other possibilities with Serfontein and Calulo that could be to the advantage of Gilboa in the future.