Jean-Sebastian Jacques
Photo by: Bloomberg
PERTH (miningweekly.com) – Mining major Rio Tinto has signed a binding agreement with Australian coal producer Whitehaven Coal to divest of its 75% interest in the Winchester South coal project, in Queensland, for A$200-million.
“We believe this agreement for the sale of Winchester South represents the best option for the future development of the project while delivering attractive value for Rio Tinto as we continue to streamline our portfolio,” Rio CEO Jean-Sebastian Jacques said on Thursday.
Under the terms of the agreement, Winchester would pay Rio an initial A$150-million in cash on the date of completion, and a further A$50-million 12 months after the transaction date.
Whitehaven MD and CEO Paul Flynn commented that the Winchester South project was a significant strategic acquisition for the company, which offered an opportunity to develop and operate a high-quality, large-scale coking coal mine in one of the world’s premier coking coal basins.
“Winchester South will form a key part of the company’s longer term growth plan and complements our Vickery project in the Gunnedah basin as another high-quality asset which will help Whitehaven respond to the strong and growing demand for premium coking coal that exists in Asian markets.”
Winchester South has a Joint Ore Reserves Committee-compliant resource of 356-million tonnes, of which 78-million tonnes is in the measured category and 146-million tonnes is in the indicated category.
The project is expected to produce between 7.5-million and 15-million tonnes a year, with an opencut mine life of between 20 and 30 years.
The transaction is subject to customary conditions precedent being satisfied, including the receipt of regulatory approvals from Australia’s Foreign Investment Review Board and the Queensland government. Subject to all regulatory approvals and other conditions precedent being satisfied, completion is expected to occur in the second quarter of 2018.
Meanwhile, Rio said that a separate process remained under way to sell its interest in the Kestrel underground mine, the company’s remaining Australian coal asset.
Rio earlier this week struck a $1.7-billion deal with diversified miner Glencore, which will see Rio divest of its 82% interest in the Hail Creek coal mine and its 712% interest in the Valeria coal resource.
The miner is exiting its coal business to focus on iron-ore and copper.