Under the terms of the deal, Coking Coal One, a fully-owned subsidiary of Bowen Coking Coal, will divest a 10% stake in the coal mine to MPC Lenton and the remaining 90% interest to another wholly-owned subsidiary of Bowen Coking Coal
The Broadmeadow East coal mine in Australia will be added to the Burton-Lenton JV. (Credit: Bowen Coking Coal Limited)
The Burton-Lenton joint venture (JV) is set to incorporate the Broadmeadow East coal mine in Queensland, Australia in its portfolio through a cash and royalties deal with Bowen Coking Coal and MPC Lenton.
MPC Lenton is a 100% subsidiary of the Formosa Plastics Group.
Under the terms of the deal, Coking Coal One, a fully-owned subsidiary of Bowen Coking Coal, will divest a 10% stake in Broadmeadow East mine to MPC Lenton and the remaining 90% interest to another wholly-owned subsidiary of Bowen Coking Coal.
New Lenton Coal has a 90% interest in the Burton-Lenton joint venture, while MPC Lenton has a 10% interest.
As per the terms, MPC Lenton will pay Bowen Coking Coal A$13m ($8.7m) in cash on the completion of the sale.
Besides, the company will pay acquisition royalty consideration of A$2.1 ($1.4m) per run of mine tonne of its 10% share of production from the Broadmeadow East mine on a quarterly basis.
The subsidiary of Formosa Plastics will also make a pre-payment of A$20m ($13.38m) to Burton-Lenton joint ventures as its future JV contributions.
MPC Lenton will pay the consideration at two times as A$7.5m ($5m) within five business days and A$12.5m ($8.36m) by 31 July 2023.
Bowen Coking Coal CEO Mark Ruston said: “Broadmeadow was an undeveloped asset acquired from Peabody in 2021 for A$1 million plus royalties and brought into production in quick-time in 2022 to make the most of bullish markets.
“Production to date has eclipsed 1 million ROM tonnes and we are currently operating at an annualised rate of in excess of 1.5Mtpa.
“The Formosa Group, a large diversified multi-national conglomerate headquartered in Taiwan, has been a supportive partner of Burton-Lenton Joint Venture since 2011, and we are pleased that they have taken an interest in the Broadmeadow East Mine.”
The completion of the transaction is subject to conditions, including the Australian Foreign Investment Review Board (FIRB) approval and indicative approval from the State Minister for Resources.
In July 2022, Bowen Coking Coal announced the commencement of coal mining at the Broadmeadow project.