PERTH (miningweekly.com) – Coal miner Stanmore Coal on Thursday unveiled a A$694.1-million capital raise initiative and a $120-million finance facility to fund its purchase of an 80% interest in the BMC metallurgical coal joint venture (JV) in Queensland from major BHP.

Under the agreement, Stanmore would acquire 100% of Dampier Coal from diversified miner BHP, which holds its interest in BMC, for $1.35-billion. The purchase price comprises $1.1-billion cash on completion, $100-million in cash six months after completion and the potential for up to $150-million in a price-linked earnout payable in the 2024 calendar year.

Stanmore will now undertake a seven-for-three pro-rata renounceable accelerated entitlement offer, priced at A$1.10 each, and will issue 631-million new shares representing around 233% of the company’s current shares on issue.

The offer price represented a 12% discount to Stanmore’s last closing price on March 2, and an 8.4% discount to the company’s five-day volume weighted average share price.

Golden Investments, a wholly owned subsidiary of Golden Energy and Resources (GEAR), which holds a 75.33% interest in Stanmore, has committed to a partial uptake of its entitlement, and will subscribe for $300-million of its entitlements, bringing its interest in Stanmore to 64.1% post the entitlement offer.

The institutional component of the entitlement offer will close on March 4, while the retail component of the entitlement offer will close on March 10.

Stanmore said on Thursday that the remaining cash requirements for the $1.1-billion purchase price will be funded from a $625-million acquisition debt facility, secured in January this year, as well as from internal cash.

The acquisition of BMC is expected to result in production of between 5.9-million and 6.5-million tonnes of saleable coal for Stanmore, in the six months ending December.

Meanwhile, the company also entered into a definitive facility agreement with lender Virtue Investment Corporation for a $120-mllion senior secured loan facility.

The facility will have a three-year maturity date and an interest rate of 8% a year.

Funds from the facility will be used for general corporate purposes, including working capital needs.