PERTH (miningweekly.com) – ASX-listed Bowen Coking Coal has struck a deal with fellow listed mining contractor MACA to acquire the Bluff PCI coal mine, in Queensland.

Bowen Coking Coal was awarded preferred bidder status in July this year for the sale process of the Bluff mine by the receivers and managers of MACA.

Under the terms of the transaction announced on Tuesday, MACA will receive A$5-million in either cash or Bowen shares, less a $250 000 cash deposit, which has already been paid.

MACA will also be released of a A$4.6-million environmental financial assurance bond, and will be paid A$2/t in royalty on coal sold above $120/t, capped at A$10-million, and A$5/t in royalties for coal sales exceeding $150/t, uncapped. For coal sales ranging above $200/t, MACA will receive A$5/t in royalties, uncapped.

The Bluff mine assets include a granted mining lease and approved Environmental Authority to mine up to 1.8-million tonne a year of high quality ultra low volatile PCI coal. Coal production commenced in the first quarter of 2019 and 1.4-million tonnes were mined by midway through the fourth quarter of 2020, at which time the project was placed on care and maintenance.

Bowen told shareholders that the re-start capital is estimated at between A$5-million and A$7-million, with A$6-million to A$9-million estimated in total for the first 12 months. Bluff has total indicated and inferred resources of 13.5-million tonnes.

The company added that detailed mine planning has indicated a production target of between 1-million tonne a year and 1.2-million tonnes a year run-of-mine for an estimated life-of-mine ranging between four to six years, depending on the price scenario.

“Bluff is a rare opportunity to acquire a near production asset which can be recommissioned without significant capital expenditure. The acquisition of the Bluff PCI mine accelerates our goal of becoming the Bowen basin’s next independent producer of high-quality metallurgical coal to supply the steel industry worldwide,” Bowen executive chairperson Nick Jorss said.

“Our experienced team is preparing to restart the mine as soon as possible to maximise economic and social benefits afforded by the current high coal price environment.”

Bowen is currently considering various proposals from debt providers to fund the Bluff mine restart costs, which would facilitate early access to strong project cash flows.

The transaction is expected to complete by the end of the 2021 calendar year, and the closing of the acquisition is conditional upon regulatory approvals for the transfer of the assets, including indicative ministerial approval for the transfer of the tenements comprising the Bluff project.