Whitehaven Coal will take on Rio Tinto’s 75 per cent interest in the Winchester South coal development project, 30km south-east of Moranbah, for $200 million.
Total consideration is comprised of $150 million payable to Rio Tinto by Whitehaven on the date of completion and a further unconditional payment of $50 million payable 12 months after the date of completion.
The news comes after an announcement this week that Glencore is buying Rio Tinto’s majority stake in the Hail Creek coal mine and adjacent coal resources, as well as its 71.2 per cent interest in the Valeria coal resource, for $2.2 billion (US$1.7 billion).
A separate process remains under way to sell Rio Tinto’s interest in the Kestrel underground mine, the company’s remaining Australian coal asset.
Whitehaven Coal managing director and chief executive officer Paul Flynn described Winchester South as a significant strategic acquisition, offering an opportunity to develop and operate a high-quality, large scale coking coal mine in one of the world’s premier coking coal basins.
“Winchester South will form a key part of the company’s longer term growth plan and complements our Vickery project in the Gunnedah Basin as another high quality asset which will help Whitehaven respond to the strong and growing demand for premium coking coal that exists in Asian markets,” he said.
“Whitehaven generates the greatest value for shareholders where the company can deploy its full breadth of skills across approvals, construction and operations and the Winchester South project aligns perfectly with these strengths.”
The Scentre Group currently owns the remaining 25 per cent of Winchester South.
The project has a JORC resource of 356Mt and would produce coking coal and thermal coal products.
It would suit an open-cut mine and would potentially offer a 20 – 30 year mine life at a ROM production rate of 7.5Mtpa to 15.0Mtpa, although significant exploration potential remains.