The MetRes joint venture (JV) between Stanmore Coal and M Resources has agreed to acquire the Millennium and Mavis Downs coal mines in Australia from Peabody Energy.
The JV signed an agreement to purchase the mines, which are currently in care and maintenance, for an upfront cash consideration of nearly $1m (A$1.25m) and a royalty agreement, which is capped at $1m (A$1.25m).
MetRes will also undertake rehabilitation obligations with an investment of around $19.8m (A$25.7m).
The incurred rehabilitation costs of $9.67m (A$12.5m) will be reimbursed by Peabody over a two-year period.
The scope of the deal includes the acquisition of 0.5Mtpa of long-term rail and port capacity and 349 million litres of long-term raw water supply allocation to support a mining restart. It also will also acquire all associated contractual rights and obligations.
In a press statement, Stanmore Coal said: “Restarting the Millennium and Mavis Downs Mine represents a low capital and quick to market investment opportunity in a high-quality metallurgical coal asset, supported by access to existing critical infrastructure.”
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With a peak production of up to one million tonnes a year, the mine is slated to restart operations from July and expected to create between 150 and 200 jobs.
According to the JV agreement between M Resources and Stanmore Coal, the latter agreed to provide up to $23.2m (A$30m) in financing to the JV to cover initial working capital requirements.
Stanmore will also provide an additional debt facility of $11.6m (A$15m) to support potential rehabilitation surety obligations.
According to estimates, the two high-quality coking coal assets have Joint Ore Reserves Committee (JORC) resources of 37 million tonnes.