A Western Australian mining and metals company, with high quality operations in Australia, Southern Africa and South America, has acquired a large stake in a highly developed coking coal operation.
South32 announced in a statement this week that it will acquire a 50% stake in the Eagle Downs metallurgical coal project, located in Queensland Bowen Basin.
The remaining 50% will continue to be held by its current owners, Aquila Resources Pty Ltd which in itself is a subsidiary of China BaoWuf Steel Group.
As part of the deal, which comprises of an upfront payment of around $106m upon completion, South32 will assume operatorship of the project and look to advance the development of the site.
South32 Chief Executive Officer Graham Kerr said, “We have a long-standing relationship with BaoWu as a supplier of manganese ore and alloy. We are very pleased to be able to further strengthen this relationship by assuming operatorship of Eagle Downs.
This Acquisition embeds an attractive development option within our growing operating footprint and puts our strong balance sheet to work in a disciplined manner. This high quality metallurgical coal project benefits from prior investment which has the potential to support its accelerated development and deliver significant value to both South32 and Aquila.”
The Eagle Downs project is a high quality and fully permitted metallurgical coal development project. One of the key highlights of the project is its proximity to the Peak Downs mine, owned and operated by BHP Billiton Mitsubishi Alliance.
Eagle Downs has the potential to average 4.5 Mtpa, from one longwall over the first 10 years of full production.