Diversified mining group South32 has assumed operatorship of the Eagle Downs metallurgical coal project, following the completion of the acquisition of a 50% interest in the Bowen basin project.
The other 50% is owned by Aquila Resources, a subsidiary of China's Baowu Steel.
South32, which in May announced the transaction, acquired the project for an up-front cash payment of $106 million and now has to make a further $27 million payment over three years. A coal price linked production royalty will also be payable, capped at $80 million.
"The acquisition of Eagle Downs embeds another attractive development option within our growing portfolio, with the upfront payment representing a minor premium to the historical infrastructure spend reflecting our move to operating control," said CEO Graham Kerr.
The fully permitted project was placed under care and maintenance in late 2015, and currently has a coal resource of 1.12 billion tonnes, of which 67% is in the measured category and 12% in the indicated category.
South32 is planning a final feasibility study to optimise the mine's design and development, and subject to the findings of this study and the requisite approvals, the company will construct a multi-seam underground longwall metallurgical coal mine and processing plant with a dedicated rail spur and train load-out facility.
The company recently also acquired Arizona Mining for $1.3 billion, but Kerr has said that the firm will slow down on buying assets.
(Writing by Becky Du Editing by Harry Huo)
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