June 12, 2018 - Australia's Stanmore Coal has agreed to buy the Wotonga South coking coal deposit in Queensland from Peabody Energy subsidiary, Millennium Coal, for $30 million.
The proposed acquisition, which includes the MDL137 and EPC728 tenements, will strengthen Stanmore’s presence in the Bowen Basin, where it already owns the adjacent Isaac Plains Complex.
Subject to approvals, the acquisition will enable Stanmore to develop an open cut mining operation with potential to extract 15–20Mt of coal, extending the life of Isaac Plains.
Stanmore will include this coal in its Isaac Plains South project that is being developed south of the Isaac Plains Complex.
The company plans to amalgamate the new assets with the EPC755 tenement, which holds potential for coal resources in addition to Wotonga South.
Stanmore managing director Dan Clifford said the deal represented the culmination of the company’s work to assemble a long-life resources base over the past three years.
“With the acquisition and permitting of Isaac Plains East and now the acquisition of Wotonga South, Stanmore can cement its ‘capital light’ approach utilising our regional advantage and infrastructure,” Clifford said.
“With this significant step taken, and the bankable feasibility study under way for the Isaac Plains underground, the company has a clear pathway for the utilisation of the circa $350 million replacement value infrastructure at Isaac Plains acquired by the company in 2015, and supports a significant improvement in EBITDA and cash flow from operations for the company over the next 15-year period.”
The acquisition will involve a $6 million payment at completion of the deal in July, followed by a series of deferred payments totalling $24 million over the next 12 months. The deal will also include a production-based royalty that will be capped at $10 million.
Wotonga South, which is 10km south of the existing coal handling and process plant at Isaac Plains, has a coal resource of 22.8Mt.
The deposit will support a mine life of eight to 10 years and has the capability to produce semi-hard coking coal, a mid-vol PCI product, as well as a range of semi-soft/weak coking coals.
Stanmore plans to fund the acquisition from cashflows and through existing debt facilities.
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