Linc Energy to sell Carmichael coal revenue rights back to Adani Group for $145m

28 August 2014 (Last Updated August 28th, 2014 18:30)

Australian energy firm Linc Energy has agreed to sell its revenue rights for the Carmichael coal project back to Adani Group for $145m.

Linc

Australian energy firm Linc Energy has agreed to sell its revenue rights for the Carmichael coal project back to Adani Group for $145m.

The company was due to receive a $1.87 per tonne royalty on coal produced at the $15.4bn Carmichael mine in the Galilee Basin in Queensland for the first 20 years.

Linc Energy has, however, decided to sell the rights in order to reduce its debts, amidst current weak coal prices and various risks associated with the coal industry.

Linc Energy CEO and managing director Peter Bond said: "We look forward to making further announcements as we continue the process of simplifying and focusing our company on the development of our core assets.

"Linc Energy has a number of very good quality assets, the sale of the Adani Royalty for AU$155m is a great example of one of these.

"It makes sense to start to cash-up our balance sheet and commence to drop-out the debt and focus on our world-class assets like the Sapex shale."

"And though I would have liked to keep this asset for the longer term, it makes sense to start to cash-up our balance sheet and commence to drop-out the debt and focus on our world-class assets like the Sapex shale."

In August 2010, Adani Group purchased the mine from Linc Energy for $468m in cash and agreed to pay the royalty on production, which was expected to be more than $2.8bn over the royalty lifetime.

According to analysts, the deal holds good for both Adani and Linc, where Adani can remove the liability of the projectwhile Linc accumulates cash for other business activities.


Image: Adani Group purchased the Carmichael coal project from Linc Energy for $468m in cash. Photo: Public domain.

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