South32 announced that it has completed the acquisition of a 50% interest in the Eagle Downs metallurgical coal project in Queensland’s Bowen Basin (Eagle Downs).
South32 has assumed operatorship with the other 50% interest in the project held by Aquila Resources Pty Ltd (Aquila), a subsidiary of BaoWu.
The consideration comprises an upfront payment of approximately $106m (excluding transaction costs), a deferred payment of US$27M due three years after completion and a coal price linked production royalty that will also be payable and is capped at $80m. The upfront payment has been funded from the Group’s cash reserves.
South32 Chief Executive Officer Graham Kerr said, “The acquisition of Eagle Downs embeds another attractive development option within our growing portfolio, with the upfront payment representing a minor premium to the historical infrastructure spend reflecting our move to operating control.”
“We are pleased to be able to further strengthen our long-standing relationship with BaoWu and look forward to working with Aquila to commence the final feasibility study to optimise the mine design and development.”
Subject to the findings of the feasibility study, South32 and Aquila plan to construct a multi-seam underground longwall metallurgical coal mine and processing plant with a dedicated rail spur and train loadout facility.
Eagle Downs is a large, high quality and fully permitted metallurgical coal development project located approximately 25km south-east of the town of Moranbah. The project was placed under care and maintenance in late 2015 having benefitted from initial investment that delivered site infrastructure including water supply and high voltage systems, office buildings and water and sediment dams. Dual 2km drifts are also approximately 40% complete.
Source: Company Press Release