Stanmore to Acquire Wotonga South Coking Coal Deposit

Stanmore Coal (ASX:SMR) announced that it has executed definitive agreements with Peabody Australia to acquire MDL1371 and EPC7282 from Millennium Coal. Subject to approvals, the acquisition of these tenements, located adjacent to Isaac Plains, will provide Stanmore with the right to develop an open cut mining operation with the ability to extract circa 15 -20 million tonnes of coal thereby significantly extending the life of the Isaac Plains Complex.

As quoted from the press release:

Stanmore has agreed to acquire the Wotonga South coking coal deposit contained within MDL 137 and an additional exploration area (EPC 728) for AU$30 million cash (consisting of AU$6 million payable at completion expected in July 2018 followed by a series of deferred payments totalling a further AU$24 million payable over the following 12 months) plus a production based royalty capped at circa AU$10 million (paid quarterly if the premium HCC3 coal price is over A$170/t).

• The Wotonga South deposit has a Coal resource of 22.8 million tonnes (compliant with JORC 2012) which is 10 kilometres south of the existing coal handling and process plant (CHPP) at Isaac Plains.
• The deposit will support a mine life of 8-10 years and has the capability to produce semihard coking coal, a mid-vol PCI product, as well as a range of semi-soft/weak coking coals.
• The acquisition is expected to be funded from cashflows and existing debt facilities of the company.
• Completion of the acquisition is subject to obtaining FIRB4 approval and satisfaction of other customary conditions precedent.

“This represents the culmination of the work completed over the last three years to assemble a long-life resource base for the company. With the acquisition and permitting of Isaac Plains East and now the acquisition of Wotonga South, Stanmore can cement its ‘capital light’ approach utilizing our regional advantage and infrastructure. With this significant step taken, and the bankable feasibility study underway for the Isaac Plains Underground, the company has a clear pathway for the full utilization of the circa AU$350 million replacement value infrastructure at Isaac Plains acquired by the Company in 2015 and supports a significant improvement in EBITDA and cash flow from operations for the company over the next 15-year period,” said Dan Clifford, managing director of Stanmore Coal.

Click here to read the full press release