The transaction consideration may be reduced if the Australian resources company pays the dividends to SMC shareholders, Dampier Coal and Mitsui prior to closing of the transaction, which is expected in fourth quarter this year

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Stanmore to acquire remaining stake in SMC. (Credit: BHP)

Stanmore Resources, through its wholly owned subsidiary Dampier Coal, has signed an agreement with Mitsui & Co., to acquire the remaining 20% interest in Stanmore SMC.

In May this year, Stanmore acquired 80% stake in BHP Mitsui Coal (BMC), which was later renamed as Stanmore SMC, for a total consideration of $1.35bn in cash.

BMC is a joint venture between BHP Group and Mitsui, and is focused on the development and operation of three coal assets in the Bowen Basin.

Under the terms of the current agreement, the Australian resources company is expected to pay $380m upon closing, subject to dividends paid to Mitsui.

Stanmore intends to fund the transaction through available cash.

It has adequate internal sources to address all the ongoing cash requirements, without needing any new debt or capital raise, said the company.

The transaction is expected to be completed in Q4 2022, subject to approval of Australia’s Foreign Investment Review Board (FIRB).

Upon closing of the transaction, SMC will become a 100% owned entity of Stanmore.

Stanmore Resources CEO Marcelo Matos said: “Following the previous acquisition of the majority interest in SMC from BHP, this Transaction allows Stanmore to consolidate its position as a leading metallurgical coal miner in the Bowen Basin.

“Having 100% control of South Walker Creek and Poitrel, as well as Wards Well and other projects, allows Stanmore to maximise value amongst our assets in the region.”

Stanmore is expected to declare and pay a dividend to SMC shareholders, Dampier Coal and Mitsui.

The dividend, if paid before the closing, would reduce the transaction consideration paid to Mitsui.

With the acquisition of SMC, Stanmore is enabled to achieve full synergies between the SMC operations and its other operations.

Also, the transaction allows SMC to join the Stanmore tax consolidated group and benefit from the associated efficiencies.

Furthermore, Stanmore said that the acquisition is in line with its investment strategy to develop existing operations and maximise synergies from its existing infrastructure.