Cockatoo Coal to sell 49 per cent of Woori project

THE BOURSE WHISPERER: Emerging Australian metallurgical and thermal coal producer Cockatoo Coal has reached an agreement with Mitsui Coal Holdings for the sale of a 49% in the Woori coal project.

The Agreement involves the two companies and subsidiaries and will see Mitsui subsidiary MCH Surat Basin Investment acquire a 49% participating interest in the Woori coal project from Cockatoo subsidiary Surat Coal for $37.25 million.

It will also result in the consolidation of the Collingwood, Taroom and Woori coal projects into one joint venture activity to be managed by Cockatoo.
 
“The sale price represents $0.90 per Measured Resource tonne defined at the Woori project compared to the company’s current enterprise value of approximately $0.30 per resource tonne,” Cockatoo Coal said in its ASX announcement.

“Mitsui currently own 49% of the Collingwood and Taroom projects and this Woori transaction will equalise the ownership of these three most significant projects in the Surat Basin.

“The consolidation of the Collingwood, Taroom and Woori coal projects into one joint venture activity to be managed by Cockatoo will facilitate the orderly development of these projects.”

Cockatoo said the overall scope of the consolidated joint venture, the North Surat JV, will be to complete a feasibility study to assess the three projects and determine the optimum development program and schedule.

The North Surat JV will establish a marketing committee with the objective of securing letter of intent support for markets for the coal to be produced.

MCH (or a related Mitsui entity) is to be appointed the exclusive marketing agent for coal produced by the North Surat JV with marketing rights worldwide except for South Korea.

The South Korean market is to remain the domain for Cockatoo and its marketing partner, SK Corporation.

Completion of the agreement is subject to a number of conditions, including:

– Mitsui obtaining FIRB approval for the Woori acquisition;
– Mitsui obtaining indicative DERM approval in respect of the proposed transfer of the Woori project tenements and existing environmental authorities; and
– Formalisation of the North Surat JV documentation.

“The combination of three world class assets of Collingwood, Taroom and Woori into a single joint venture will allow Cockatoo and Mitsui to have a strong presence in the development of the Surat Basin province,” Cockatoo Coal said.

“As a frontrunner in the development of coal mines in the Surat Basin, the North Surat JV holds the company’s two development projects which are closest to the Surat Basin Rail corridor, and the large defined resources hold significant opportunity to maximise economies of scale.”