The Wards Well coal deposit is located near Peabody's Centurion hard coking coal mine complex
Peabody completes acquisition of the southern area of Wards Well coal deposit from Stanmore. (Credit: nedu503 from Pixabay)
Stanmore Resources has completed the previously announced divestiture of the southern area of its Wards Well coal deposit in Queensland, Australia to coal producer Peabody.
The Wards Well coal deposit is located near Peabody’s Centurion hard coking coal mine complex.
According to the terms of the sale agreement, Stanmore Resources has received a cash consideration of $136m. It comprises an upfront cash of $125m and a $10.5m port and rail rebate and potential future royalties.
Both parties have also signed a royalty deed and associated royalty security documentation, under which Stanmore Resources will receive a capped royalty of up to approximately $200m.
The amount is payable under certain conditions on the first 120 million tonnes of coal produced. Stanmore Resources’ royalty will increase if over 120 million tonnes of coal are produced and sold from the tenement area.
Following the sale of the southern area of its Wards Well coal deposit, Stanmore Resources retains a significant part of the Wards Well deposit including the Lancewood tenement.
Stanmore Resources and Peabody have agreed to a contingent infrastructure sharing and expansion arrangement, aimed at optimising their respective operations at the Lancewood and Centurion mines.
Furthermore, both companies have agreed to a gas rights arrangement. Under this agreement, Stanmore Resources has the right to match any proposal for the commercialisation of gas extracted from Peabody’s gas drainage operations in the Wards Well region.
Peabody stated: “The acquisition represents a strategic opportunity to extend the mine life of Centurion, Peabody’s tier one premium hard coking coal mine.
“The company is currently developing an integrated 130 million ton, 25+ year mine plan which incorporates the Wards Well coal deposit.”