Stanmore Coal Ltd. expanded its Isaac Plains complex in Queensland, Australia, with the acquisition of two tenements that include the Wotonga South coking coal deposit for A$30 million, the company said June 12.
The deposit falls within a mineral development lease for coal that Stanmore acquired, together with an exploration permit, from Millennium Coal, part of Peabody Energy Corp.'s Australian operations.
The A$30 million will be divided into a series of payments, including an initial A$6 million at completion, expected in July, followed by a series of deferred payments over 12 months. In addition, the deal stipulates a production-based royalty capped at about A$10 million, paid quarterly if the premium hard coking coal price exceeds A$170/tonne.
The company said it plans to fund the acquisition using cash flows, noting that Taurus Funds Management agreed to restructure the company's existing debt facilities to free-up US$12 million.
The deal will give Stanmore the right to develop an open cut mining operation with the possibility to extract 15 million to 20 million tonnes of coal, extending the life of the Isaac Plains project.
The company confirmed that the Wotonga South deposit will be operated as a satellite development of Isaac Plains. According to a 2018 report, Wotonga holds a coal resource of 22.8 million tonnes located 10 kilometers south of the coal handling and process plant at Isaac Plains.
Stanmore believes that the full exploitation of the Isaac Plains South project coupled with the development of underground opportunities could increase the life of mine by over 20 years.
Another satellite of the complex is the Isaac Plains East project.
