Stanmore Resources has also signed a term sheet with Aquila Coal to acquire an additional 30% interest in the Eagle Downs coal project
Australia-based Stanmore Resources has agreed to acquire South32’s 50% interest in the Eagle Downs metallurgical coal project in Queensland, Australia in a deal worth up to $135m.
Under the terms of the agreement, Stanmore Resources will also take full ownership of Eagle Downs Coal Management and associated assets.
The upfront consideration for the acquisition is $15m.
Additionally, the agreement entails a further payment of $20m upon the extraction of the first 100,000 tonnes of coal via longwall mining techniques, along with a capped royalty of around $100m in the future, contingent on average coal index price thresholds.
Located nearly 20km from the town of Moranbah, Eagle Downs is a large, high quality low volatile hard coking coal development underground project.
The other 50% stake in the Australian coal project is owned by Aquila Coal, a subsidiary of China Baowu Steel Group.
The Australian company will be the manager of the joint venture through its 100% ownership in Eagle Downs Coal Management.
Stanmore Resources CEO and executive director Marcelo Matos 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.”
Stanmore Resources has also signed a term sheet with Aquila Coal to acquire an additional 30% interest in the Eagle Downs coal project. This will be on the same commercial terms as those agreed under the deal with South32.
The term sheet also includes provisions for Stanmore Resources to acquire an 80% interest in the Eagle Downs South tenement which will be included and form part of the jointly owned JV assets.
The transaction is subject to certain limited conditions precedent, including the Australian Foreign Investment Review Board (FIRB) approval, third-party consents, and Stanmore Resources acquiring the shares in Eagle Downs Coal Management.
It is expected to be completed by the end of Q2 2024.