Stanmore Resources has reached an agreement to acquire a 50% interest in the Eagle Downs Metallurgical Coal Joint Venture Project in Queensland, Australia from mining company South32.

Under the agreed terms, Stanmore will buy the stake for $135m (A$206.5m). This includes an upfront cash payment of $15m, $20m upon the first 100,000 tonnes of coal being mined from longwall mining methods and a capped royalty of about $100m.

Stanmore CEO and executive director Marcelo Matos said: “This is in line with our commitment to developing options for expanding and increasing the longevity of our business in the area by leveraging our strong existing infrastructure position.”

The remaining 50% stake in the Eagle Downs coal project is owned by China Baowu Steel Group subsidiary Aquila Coal.

Stanmore intends to acquire an additional 30% interest in the Eagle Downs project from Aquila on the same commercial terms as those agreed with South32. 

Aquila has undertaken to waive any pre-emptive rights in respect of the sale of South32’s stake in the JV.

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Located near Stanmore’s existing operations, the Eagle Downs project has been in care and maintenance since late 2015.

The project is estimated to hold resource base of 1,140Mt, with projections to produce premium low-volatility hard coking coal.

Matos added: “The acquisition of Eagle Downs is consistent with Stanmore’s ambition to expand its footprint in Queensland’s premium metallurgical coal basin.

“Eagle Downs is a high-quality project underpinned by a substantial resource base, which provides an exciting development opportunity that is complementary to our broader portfolio and in close proximity to our existing operations.”

Meanwhile, in a separate development in November 2023, South32 and AusQuest announced the extension of their existing strategic alliance agreement for two more years, until 31 December 2025.