PERTH (miningweekly.com) – ASX-listed Bathurst and its joint venture (JV) partner Talleys Energy, through JV vehicle Phoenix Coal, have moved to acquire coal mining assets in New Zealand.

Bathurst told shareholders on Wednesday that Phoenix had struck a deal with Solid Energy New Zealand to acquire the Buller Plateau operating assets, which include the Stockton, Rotowaro and Maramarua mines, as well as certain assets at the Huntly West mine.

Under the terms of the agreement, Phoenix will acquire the assets for NZ$46-million in cash and a semi-annual contingent payment of up to NZ$50-million.

The contingent payment structure is based on a sliding scale share of Phoenix’s actual coal sales revenue from the Stockton mine, subject to metallurgical coal prices being above a certain threshold.

Phoenix will fund the purchase through a NZ$15-million bank debt facility and equity commitments from the JV partners.

Bathurst will contribute some NZ$26-million to Phoenix, with the company raising the funds through a capital raising over three separate instruments, the first of which is an institutional placement of redeemable convertible preference shares to raise A$11.3-million.

A second institutional placement of unsecured convertible notes is expected to raise A$7.5-million, while the issue of US dollar denominated debt securities to institutional and sophisticated investors will raise a further $8-million.

Stockton is an opencast mine with a production capacity of 2.2-million tonnes a year; however, with current market conditions, output has been optimised at one-million tonnes a year. The project has current reserves of 12.3-million tonnes and resource of some 71.8-million tonnes, with an economic life of some 11 years under its current mine plan.

Meanwhile, the Rotowaro and Maramarua operations form part of the North Island domestic business, which produces some 700 000 t/y of coal.

Bathurst said on Wednesday that the addition of the assets to the company’s existing portfolio would complete two key components of its strategy to enter into the export market, and to penetrate the domestic market in New Zealand.

Adjusting for Bathurst’s 65% interest in Phoenix, the company will now have a metallurgical coal reserve of some 26.9-million tonnes and resources of 147-million tonnes.

Phoenix is expected to produce between 900 000 t and 1.1-million tonnes in 2017.