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PERTH (miningweekly.com) – The share price of ASX-listed Realm Resources has continued to climb after it was revealed the junior company is behind the purchase of major miner Anglo American’s Foxleigh metallurgical coal mine, in Queensland.
Anglo American last week wrapped up the sale of its 70% interest in the Foxleigh mine to a consortium led by Australian fund manager Taurus Fund Management.
Realm Resources this week revealed that its subsidiary Middlemount South had purchased Anglo’s interest in the Foxleigh joint venture, with the remainder of the project held by Korea’s Posco.
Middlemount is a 99.9%-owned subsidiary of Realm, which, in turn, is 87.8% held by Taurus Resources Fund No 2.
As part of the transaction, Middlemount provided bank guarantees of A$85.3-million on a back-to-back basis to cover underlying guarantees, and paid A$43.7-million in cash to Anglo American. A further working capital adjustment could also be payable in 80 days, subject to a dispute period.
Furthermore, Anglo will be paid a semi-annual royalty on 70% of the coal extracted and sold at Foxleigh, for a period of twelve-and-a-half years. The royalty payments will be made based on the average coal price achievement in each six-month royalty period, and will be capped at A$75-million in aggregate.
On announcing its involvement in the Foxleigh transaction, Realm’s share price surged by nearly 500% from 0.3c a share to 3.7c a share.
Anglo American in 2007 spent $620-million to acquire its share in the Foxleigh mine, with the miner reporting an attributable saleable production of 1.8-million tones from the mine in 2015.