PERTH (miningweekly.com) – Coal miner Stanmore Coal has struck a A$30-million deal with Peabody Australia to acquire the Wotong South coking coal deposit, which is located adjacent to Stanmore’s Isaac Plains project, in Queensland.
In addition to the A$30-million cash price, Stanmore has also agreed to a production-based royalty, capped at A$10-million, which will be paid quarterly if the premium hard coking coal price is more than A$170/t.
The Wotong South deposit has a resource of 22.8-million tonnes, and is located some 10 km from the existing coal handling and process plant (CHPP) at Isaac Plains.
The deposit is expected to deliver between 15-million and 20-million tonnes of coal over a mine life of between eight to ten years. The deposit will form part of Stanmore’s new Isaac Plains South project, which will be developed south of the existing Isaac Plains complex, and the deposit will be amalgamated with Stanmore’s exploration licence in the area, which is also estimated to hold significant potential for coal resources.
The company told shareholders on Tuesday that the development of Wotonga South as a satellite deposit, was a logical extension of the Isaac Plains complex, and approvals would be fast-tracked, incorporating a thorough mine planning and environmental assessment.
The existing Isaac Plains complex has the capacity to process 3.5-million tonnes a year run-of-mine coal through the CHPP, as well as train load out facility.
Stanmore has been working to expand operations at the complex, through the addition of the Isaac Plains East project, which is set to start production in July this year, as well as an underground mine which is currently the subject of a bankable feasibility study.
The company believed that production from three openpit sources, which would now include the Wotong South deposit, and a potential underground mine at Isaac Plains, would lead to a long-life operation with the CHPP operating at full capacity.
MD Dan Clifford said that the acquisition of Wotong South represented the culmination of the work completed over the last three years, to assemble a long-life resource base for the company.
“With the acquisition and permitting of Isaac Plains East and now the acquisition of Wotong South, Stanmore can cement its capital light approach using our regional advantage and infrastructure.
“With this significant step taken, and the bankable feasibility study under way for the Isaac Plains underground, the company has a clear pathway for the full utilisation of the A$350-million replacement value infrastructure at Isaac Plains acquired by the company in 2015, and supports a significant improvement in earnings before interest, tax, depreciation and amortisation and cash flow from operations for the company over the next 15-year period.”
The acquisition of Wotong South will be funded from cash flows, with Taurus Funds Management agreeing to restructure existing debt facilities to make $12-million available for the acquisition, if required.