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Peabody sells undeveloped metallurgical assets to Pembroke Resources

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World Coal,

Peabody Energy, through several of its Australian subsidiaries, has entered into sale and purchase agreements with Australia-based Pembroke Resources to sell its interest in undeveloped metallurgical coal reserve tenements in Queensland's Bowen Basin for AUS$104 million in cash plus a royalty stream.

Peabody has received cash proceeds of AUS$65 million as part of the transaction, with an additional AUS$22 million of cash proceeds anticipated to be received before the end of 3Q16 once certain governmental and regulatory approvals are granted. The remaining proceeds are related to the sale of select tenements held by the Coppabella-Moorvale Joint Venture (CMJV) and are subject to approval by the CMJV partners and other conditions.

The transactions include the Olive Downs South, Olive Downs South Extended, Willunga and Olive Downs North tenements, which consist of undeveloped SEC-reported proven and probable reserves (as of Dec. 31, 2015) totalling approximately 165 million short t on a net basis to Peabody.

The Olive Downs Ccomplex comprises Olive Downs South (ODS), Willunga, and Olive Downs North (ODN), with rights to four exploration permits for coal and two mine Leases (both for ODN). Pembroke has acquired a 100% interest in ODS and Willunga. Subject to the approval of the minority partners, the company has agreed to acquire an 87.3% interest in ODN. The total consideration is AU$120 million plus an agreed royalty.

This sale is part of Peabody's overall portfolio management strategy, one of a range of measures the company is taking to improve the business across three core priorities of operational, financial and portfolio. The reserves are not assigned to active mining operations within Peabody's core Australia region. The agreement contains no financing condition, with Denham Capital providing all funding for the transaction. Peabody expects to use transaction proceeds for general corporate purposes.

Pembroke Resources has indicated that it will continue to assess other acquisition and development opportunities as it seeks to further build out its portfolio of high-quality metallurgical coal assets.

Edited from various sources by Harleigh Hobbs

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