Joint venture (JV) of Fortune Minerals and POSCO Canada, Arctos Anthracite, has sold its interests in 61 contiguous coal licences to British Columbia Railway (BC Rail) for $18.3m.
The coal licences cover 16,411ha in the Klappan region of north-west British Columbia.
Under the agreement, Fortune Minerals and POSCO Canada have a ten-year option to buy back the licences for a similar price.
Fortune Minerals president and CEO Robin Goad said: "The back-in option allows for the re-purchase the coal licences should conditions improve and make development an attractive path forward for the joint venture."
The partners intend to restructure Arctos Anthracite and share the sale proceeds, after purchasing the royalty owned by the previous owner for $308,000.
Fortune plans to use its share of $9m for working capital and to repay debts.
Fortune Minerals and POSCO Canada will each hold a 50% stake in the new business, with Fortune continuing to manage the project.
As part of an amending agreement, restructuring of the JV was done to allow the companies to equally share the cash proceeds from the transaction with BC Rail.
The process also eliminates certain funding requirements listed in the original agreement.
Under the new terms, the companies are responsible for their 50% pro-rata shares of future expenditures on the project.
Fortune will be responsible for reclaiming the Arctos site from the JV’s previous work on the property, as well as receiving funds allocated for this work.