Stanmore Resources has completed its acquisition of BHP’s 80 per cent interest in BHP Mitsui Coal (BMC), adding a further 10 million tonnes (Mt) of metallurgical coal production to its portfolio.
To execute the deal, Stanmore paid $US1.1 billion ($1.55 billion) on completion plus $US200 million ($281.3 million) for working capital, an adjusted consideration which takes into account BMC’s higher working capital balances in the wake of stronger market conditions.
The coal miner owes BHP $US100 million ($140.6 million) six months from November 3 2022, and up to $US150 million ($211 million) in a price-linked earnout payable to BHP in the 2024 calendar year.
Stanmore funded the transaction through existing cash reserves, which benefited from a $694 million renounceable entitlement offer the company launched in March. Stanmore and its subsidiaries also fully drew down its debt facilities, including a $US625 million ($879 million) acquisition debt facility announced in January.
“The completion of this transaction marks an important milestone in our history,” Stanmore chief executive officer Marcelo Matos said.
“Metallurgical and PCI (pulverised coal injection) coal prices remain at historically high levels and Stanmore will benefit from those prices with the addition of production of approximately 10 million tonnes of marketable metallurgical quality coal creating substantial additional value for the company.”
As part of the transaction, Stanmore has added the South Walker Creek and Poitrel open-cut mines to its portfolio.
Located in Queensland’s Bowen Basin, South Walker Creek has been operating since 1996 and has a mine life of 25-plus years. The operation produced 4.9Mt of PCI coal in the 2021 financial year (FY21).
Poitrel is located 35km east of Moranbah in Queensland and produced first coal in 2006. Producing 3.9Mt in FY21, the operation has a mine life in excess of 10 years.
The two mines complement Stanmore’s Isaac Plains coal complex in the Bowen Basin and its Millennium and Mavis Downs joint venture mine near Moranbah, which the company shares in a 50/50 split with M Resources.
Isaac Downs was approved for construction and operation in July 2021 and is expected to produce up to approximately 35Mt of run-of-mine coal over 16 years.
Millennium and Mavis Downs is currently operating as open cut. Underground mining operations are planned to commence in July 2022 and produce 1.2 million tonnes per annum.