KALGOORLIE (miningweekly.com) – ASX-listed Comet Ridge has struck an agreement with its joint venture (JV) partner Australia Pacific Liquefied Natural Gas (APLNG) to acquire its 30% interest in the Mahalo gas project, taking its own interest from 40% to 70%.
The company will pay A$12-million in cash to APLNG on the completion of the acquisition, and a further A$8-million post completion in deferred tranches.
Comet Ridge on Tuesday also announced that it had executed a funding and option agreement with remaining JV partner Santos, accessing A$13.15-million from Santos to fully fund the up-front acquisition consideration and stamp duty costs, which are due in late 2021.
In exchange for the loan funding, Santos can elect to purchase a 12.86% interest in Mahalo, at a proportional acquisition value of A$8.57-million, and has the exclusive right to negotiate an option to purchase an additional 7.14% interest in the project, on commercial terms, equalizing the shareholding at 50% for each JV partner, as well as a 50% interest in the Mahalo North and Mahalo East tenements.
“These transactions are transformational for Comet Ridge. Built on compelling acquisition metrics, they establish a streamlined JV with Santos to not only progress development plans for the Mahalo gas project, but the whole Mahalo gas hub area,” said Comet Ridge MD Tor McCaul.
“The terms we have been able to agree with APLNG and Santos unlock the potential of the entire Mahalo gas hub area to become a significant supplier of gas to the east coast market where industry dynamics have strengthened considerably as we continue to see a tightening of gas supply.”
Following completion, the streamlined Mahalo gas project JV will see Comet Ridge and Santos focused on moving the Mahalo gas hub area into production on a time and cost-effective basis. The arrangements put in place with Santos create a platform for integration, optimisation and alignment across the high-quality fairway blocks in the Mahalo gas hub area to establish a gas project with potential to supply material volumes of natural gas to both domestic and LNG gas markets on the east coast, said Comet Ridge.
This partnership enables the Mahalo gas project to be developed using a low-cost “modular” plant design.
“Santos is keen to continue to develop our Queensland resources and this transaction provides another option for additional gas reserves. We look forward to working collaboratively with Comet Ridge to assess the potential of the Mahalo gas project,” Santos CEO Kevin Gallagher said.
Meanwhile, Comet Ridge on Tuesday also reported that it had secured a A$10-million corporate loan facility from PURE Asset Management, providing the company with funding to progress the Mahalo gas hub assets.
The facility is provided in two tranches of A$6.5-million and A$3.5-million respectively. The first tranche of A$6.5-million will be immediately drawn, following execution of loan documentation, providing a proforma cash balance of approximately A$10-million at the end of June.
The facility will provide Comet Ridge with funding to progress a final investment decision on the Mahalo gas project and other corporate activities.