South32 Ltd. agreed to purchase a 50% interest in, and operate, the Eagle Downs metallurgical coal project in Queensland, Australia's Bowen Basin from a subsidiary of China Baowu Steel Group Corp. Ltd. for up to US$213 million.
The BHP Billiton Group spinoff said May 29 that it will pay US$106 million on completion, make a US$27 million deferred payment and pay a coal price-linked production royalty capped at US$80 million. The acquisition will be funded from the company's cash reserves. BaoWu subsidiary Aquila Resources Pty. Ltd. will retain a 50% interest in the project, which was placed under care and maintenance in late 2015.
Aquila has estimated that Eagle Downs can potentially export 4.5 million tonnes per annum of coal on average from one longwall over the first 10 years of full production.
Following the acquisition, the company plans to conduct a final feasibility study on the project to optimize the mine's design and development. Based on the feasibility study results, South32 and Aquila intend to construct a multiseam underground longwall metallurgical coal mine and processing plant with a dedicated rail spur and train loadout facility.
The deal is expected to close in the first half of 2019.
In a same-day release, AusQuest Ltd. said it added a fourth exploration project in Peru to its strategic alliance with South32.
