Stanmore Resources to acquire 50% interest in Eagle Downs
Published by Will Owen,
Editor
World Coal,
Stanmore Resources Ltd has signed a definitive sale and purchase agreement with a wholly-owned subsidiary of South32 Ltd to acquire South32’s 50% interest in the Eagle Downs metallurgical coal project, 100% interest in Eagle Downs Coal Management Pty Ltd (EDCM), and associated assets.
Transaction overview
Consideration payable to South32 in connection with the transaction comprises:
- US$15 million payable in cash upon completion (upfront consideration).
- US$20 million payable upon first 100 000 t of coal being mined from longwall mining methods (deferred consideration).
- A capped royalty of up to approximately US$100 million payable in the future linked to average coal index price thresholds (royalty).
Stanmore will also assume all obligations associated with potential contingent royalty payments to Vale Australia Holdings Pty Ltd associated with the transfer, applied to 50% of all future coal sales revenues capped at US$80 million and subject to minimum coal price thresholds being achieved.
The other 50% interest in the project is held by Aquila Coal Pty Ltd, a subsidiary of China Baowu Steel Group Corp. Ltd. Stanmore has been engaging in positive discussions with Aquila in relation to the joint venture as outlined further below. Stanmore will be the manager of the JV through its 100% ownership in EDCM.
Stanmore will fund the upfront consideration with existing liquidity.
The transaction follows an extensive due diligence process undertaken by Stanmore with the assistance of external legal and technical advisers.
Completion of the transaction is expected by the end of 2Q24, following the satisfaction of certain limited conditions precedent, including but not limited to Foreign Investment Review Board (FIRB) approval, certain third-party consents, and Stanmore acquiring the shares in EDCM.
CEO statement
Marcelo Matos, CEO and Executive Director, said:
“The acquisition of Eagle Downs is consistent with Stanmore’s ambition to expand its footprint in Queensland’s premium metallurgical coal basin. Eagle Downs is a high-quality project underpinned by a substantial resource base, which provides an exciting development opportunity that is complementary to our broader portfolio and in close proximity to our existing operations. We believe we can bring our strong technical capabilities, as well as unique infrastructure and logistics portfolio, which will enable Stanmore to unlock the full value potential of Eagle Downs and provide a capital efficient pathway for any future development decision.”
Read the article online at: https://www.worldcoal.com/coal/15022024/stanmore-resources-to-acquire-50-interest-in-eagle-downs/
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