SNR, an integrated mining business with operations in the United States, is founded and managed by senior mining executives with expertise spanning multiple commodities and jurisdictions. SNR is a coal mining business possessing senior industry executives with significant experience managing underground coal operations in Australia and globally for Xstrata Coal (now Glencore).

AQC and SNR intend to finalise a robust, bankable development plan to recommence underground mining with planned coal production during calendar year 2019. Key information on the development plan will be provided when the plan is finalised.

Dartbrook is currently permitted as a 6 Mtpa underground longwall mine with substantial infrastructure in place. This infrastructure includes a coal handling and processing plant, train load out facilities, water and power infrastructure, administrative buildings and other facilities that were utilised during operations under former ownership.

Transaction Overview

SNR will pay AUD 20 million to AQC (Purchase Price) for a 50% interest in AQC Investments 2 Pty Ltd, the entity which holds AQC’s interest in the Dartbrook Mine, including freehold land, infrastructure and mining tenements. The DJV will provide an AUD 10 million loan to AQC (Loan) to pay out the existing Anglo American secured loan.

The Company intends to use the Purchase Price proceeds to repay a significant portion of outstanding convertible notes held collectively by Mr Nicholas Paspaley, Mr John Robinson (Snr) and Trepang Services Pty Ltd (Financiers), and to obtain their agreement to the conversion of all remaining convertible notes to ordinary shares of the Company in accordance with the terms of the convertible notes held at the time.

The transaction is subject to certain conditions precedent, including SNR securing funding for the Purchase Price and Loan, FIRB, NSW State Government and other third party consents and approvals (including the Financiers releasing their security over the Dartbrook Mine assets), limited confirmatory financial diligence, and agreement on a fully funded development plan to recommence underground mining. The Company has received preliminary confirmation from ASX that the transaction will not require shareholder approval under ASX Listing Rule 11.

SNR will be appointed as exclusive manager and marketer for the DJV at completion, with completion anticipated in the March 2019 quarter. The transaction agreements contain warranties, indemnities, termination rights and other protections usual for agreements of this type. AQC has also agreed to reimburse SNR for its costs in preparing the development plan in circumstances where SNR has arranged funding and obtained FIRB approval, but the transaction does not proceed.

John Robinson Jnr, Chairman of Australian Pacific Coal, said “AQC welcomes the involvement of our new JV partner Stella Natural Resources with the depth of experience and resources that will be committed to the successful recommencement of mining at the Dartbrook coal mine. The transaction is anticipated to deliver substantial shareholder value through the recommencement of mining activities at Dartbrook. The DJV will provide substantial employment opportunities and actively engage with the local community throughout the mine life. The local community will once again greatly benefit from mining at Dartbrook given the substantial capital investment in critical mining infrastructure .

“The Dartbrook coal brand is already established in the energy markets throughout Asia with the mine exporting 25 million tonnes of Newcastle benchmark coal under former ownership. The recommencement of mining at Dartbrook is aligned with positive market demand signals, coupled with limited supply response, and at a time when demand for cost efficient energy continues to be resilient together with a strengthening demand for high quality, low emission coal. Dartbrook, through the DJV, is well positioned to capitalise on the strong market fundamentals and outlook for the Australian thermal coal export industry.”

David Stone, CEO at Stella Natural Resources, said. “SNR is excited to partner with AQC in the Dartbrook Joint Venture to deliver sustainable long-term results from the Dartbrook operation. Dartbrook provides the infrastructure and resource to deliver a sustained, reliable high-quality, low emission product to our potential customers. We see this as a tremendous opportunity for the local community and look forward to working with stakeholders as the operation progresses. For SNR, Dartbrook is the entry operation into the Australian coal sector after the successful integration of our US assets and we look forward to expanding our footprint as we successfully implement.”

Source: Company Press Release