Stanmore Resources Ltd., an Australian listed company trading under the ticker ASX:SMR, has finalized a decisive move to fully consolidate its control over the Eagle Downs metallurgical coal project by securing the remaining 50% stake. Additionally, they have achieved 100% ownership in the related Eagle Downs South tenements through a deal with Aquila Coal Pty Ltd and Aquila Exploration Pty Ltd, subsidiaries of China Baowu Steel Group Corporation Limited.
The terms of the acquisition, which are consistent with a previous deal for the South32 interest, include an upfront payment, contingent payments tied to the production thresholds of longwall coal mining, and a royalty stream capped to coal price indexes. Notably, Stanmore is not taking on any additional third-party royalties from the South32 transaction.
Specifically, the Eagle Downs interest compels Stanmore to pay $15 million in cash upon completion, $20 million once the first 100,000 tons of coal are mined using longwall methods, and a variable royalty up to $150 million dependent on coal index prices. For Eagle Downs South, the financial commitments are $2 million upon completion and $10 million after the initial 100,000 tons of coal are extracted.
The Eagle Downs Metallurgical Coal Project, Eagle Downs, boasts a 47-year projected lifespan and is positioned in the Bowen Basin, near Moranbah, and close to BHPB Mitsubishi Alliance’s Peak Downs Mine. This acquisition includes one of the Bowen Basin’s last undeveloped areas, which is particularly rich in the Moranbah Measures, a key source of premium seaborne traded hard coking coal.
With the rail infrastructure connecting Eagle Downs to coal terminals, the average production is anticipated to be 5.2 million tons per annum from the Harrow Creek Upper seam, positioning the operation in the lowest cost quartile for seaborne metallurgical coal supply. The mine is fully permitted, promising high-quality, low-volatile hard coking coal, with over 700 workers expected at peak production.
Significant de-risking of the project has been achieved with about 40% completion of mine underground access drifts. The project’s water supply and power infrastructure are secured, advancing the logistics solution and reinforcing the strategic value of this acquisition for Stanmore Resources.
Through these strategic acquisitions, Stanmore Resources is poised to strengthen its portfolio with high-quality, metallurgical coal assets, reinforcing its position in the coal industry and its commitment to growth in the resources sector.
Source: Stanmore, The Coal Trader AI generated
