Total
0
Shares
South Walker Creek Mine. Source: BHP.
Market Herald logo

Subscribe

Be the first with the news that moves the market
  • Stanmore Resources (SMR) is planning to acquire BHP’s (BHP) 80 per cent interest in the BHP Mitsui Coal (BMC) joint venture in Queensland
  • The business will pay US$1.2 billion (A$1.62 billion) for the BMC stake, with a potential US$150 million (A$202.9 million) follow-up payment dependent on coal prices
  • BMC’s metallurgical coal assets includes mineral resource of 2245 million tonnes and total coal reserves of 171 million tonnes, bringing in estimated annualised revenue of US$1.5 billion (A$2.03 billion)
  • SMR will fund the buy via an entitlement offer and US$625 million (A$845 million) debt facility, with the deal expected to be completed mid-2022
  • Shares in Stanmore Resources have surged 16.2 per cent to $1.20, while BHP’s share price is up 1.33 per cent at $36.57

Stanmore Resources (SMR) is planning to acquire BHP Group’s (BHP) 80 per cent interest in the BHP-Mitsui Coal (BMC) joint venture.

The business will pay US$1.2 billion (A$1.62 billion) in consideration for the stake in BMC, as well as a potential US$150 million (A$202.9 million) follow-up payment that is dependent on coal prices.

SMR plans to fund the buy through a partially underwritten pro-rata accelerated renounceable entitlement offer as well as a US$625 million (A$845 million) debt facility.

The acquisition of the mining giant’s stake in BMC has been described as “transformational” and Stanmore hopes the acquisition will be completed by mid-2022.

The joint venture assets are located nearby Stanmore’s own coal projects in Queensland’s Bowen Basin and includes mineral resource of 2245 million tonnes from the Poitrel and South Walker Creek mines.

BMC’s total coal reserves are 171 million tonnes, and SMR estimates the metallurgical coal assets will generate annualised revenue of US$1.5 billion (A$2.03 billion).

Stanmore Resources CEO Marcelo Matos said once the deal is complete, SMR will be a leading metallurgical coal producer.

“This transaction will see the company become one of the leading metallurgical coal producers globally and provide Stanmore with a portfolio of tier 1 assets, with a significantly increased reserves and resources base and assets with an expected mine life exceeding 25 years production, positioning the company for substantial cashflow generation and future growth opportunities,” he said.

BHP’s President of Minerals Australia Edgar Basto said the mining giant was pleased with the transaction.

“This transaction is consistent with BHP’s strategy, delivers value for our company and shareholders and provides certainty for BMC’s workforce and the local community,” Mr Basto said.

“As the world decarbonises, BHP is sharpening its focus on producing higher quality metallurgical coal sought after by global steelmakers to help increase efficiency and lower emissions.”

Following Stanmore’s ‘transformational’ deal announcement, company shares have surged 16.2 per cent to trade at $1.20 each.

BHP’s share price also increased 1.33 per cent to $36.57 per share at 12:41 pm AEDT.

SMR by the numbers
More From The Market Herald

" Labor releases emissions target ahead of 2022 federal election

Labor has announced a plan to reduce Australia’s greenhouse gas emissions by 43 per cent by 2030, as the party gears up for
CIMIC Group (ASX:CIM) - Chairman & CEO, Juan Santamaria

" CIMIC Group’s (ASX:CIM) CPB Contractors wins South Australia road contracts

CPB Contractors, a subsidiary of CIMIC Group (CIM), has been awarded road projects in South Australia.

" Watchdog sues Coles (ASX:COL) over staff underpayments

Coles (COL) has been accused of underpaying more than 7500 employees by $115 million between 2017 and 2020, according to an investigation by

" CBA flags private markets and investor demand as necessary drivers of net-zero targets

Commonwealth Bank (CBA) has flagged private markets as a necessary component of achieving net-zero carbon emission goals by 2050, as agreed upon at