Linc Energy Ltd. has announced that the company has entered into a number of binding agreements which, on completion, will result in the sale of all of its conventional coal assets to United Queensland Resources Pty Limited, a part of the United Mining Group (UMG).
The deal entails the sale of 100% of the shares of Linc Energy’s subsidiary, New Emerald Coal Ltd (NEC), for AUS$5 million to the purchaser through a share shale agreement. At the time of completion of the agreement, NEC will hold a number of Linc Energy’s non-coal core assets, including agreements to acquire the Blair Athol Coal Mine and its associated assets, the Teresa Project and its coal export capacity at the Port of Gladstone. NEC will then acquire the company’s remaining non-core conventional coal mining assets in Queensland, Australia for AUS$1; these assets include the Pentland and Dalby development projects and Great Northern Leases, Biloela, Drummond, Wilkie, and Rathdowney greenfield exploration projects.
NEC, under control of United Mining Group, expects to complete its acquisition of the Blair Athol Coal Mine from the Blair Athol Coal Joint Venture in the coming weeks and subsequently recommence operations on site. In addition, the existing revenue sharing agreement between NEC and Linc Energy will remain in place post-completion. Under the revenue sharing agreement, Linc Energy receives an indexed US$0.50/t of coal sold from the Blair Athol project, if the Blair Athol acquisition completes.
Importantly, as UMG will be responsible for all future development costs and liabilities, the transaction allows Linc Energy to avoid the need to direct a significant amount of future capital into it’s coal business, creating savings to Linc Energy in excess of AUS$20 million/y in administration and existing liabilities costs alone. Furthermore, it will allow Linc Energy to continue focusing on its underground coal gasification (UCG), SAPEX Shale and conventional oil and gas businesses, including its newly created Heavy Oil division.
Linc Energy’s CEO and Managing Director, Mr Craig Ricato, commented: “The sale of our conventional coal exploration, development and mining business in Queensland to the United Mining Group continues to deliver on our strategy of refocusing Linc Energy on our core business of conventional and unconventional oil and gas. In addition, it reduces our cost base and development capital requirements, while the retention of the revenue sharing agreement ensures that the company will significantly benefit from future development of these assets when the coal market improves over the coming years”.
United Mining Group’s Managing Director, Gary Williams, also commented: “The acquisition of Linc Energy’s conventional coal assets will provide a platform on which United Mining Group plans to build a substantial Australian coal portfolio over the coming years. United intends to follow on from the good work started by NEC in its preparations for their commencement of operations at Blair Athol and plans to continue with development of Teresa as its next mine into production. United is continuing with its aggressive growth plans and is looking for additional synergistic acquisitions over the coming months”.
Adapted from a press release by Emma McAleavey.
Read the article online at: https://www.worldcoal.com/coal/18022015/linc-energy-sell-conventional-coal-assets-1912/