Australian privately owned coal mining firm QCoal has won control of the finances and future offtake arrangements for Australian coking coal firm Bounty Mining from US coal producer XCoal and its affiliate Amaroo.
Bounty's shareholders have voted to reject a deal that would have seen the firm locked into selling its production through XCoal until either the end of 2025 or until 6.58mn t of coal has been loaded. It would also have seen Amaroo underwrite financing for Bounty, which has struggled to lift Cook Colliery in Queensland to its planned run rate of 1mn t/yr run-of-mine and posted a loss for the 2018-19 fiscal year to 30 June on lower than expected sales.
Instead of the XCoal proposal, Bounty has agreed to sign a new offtake and refinancing deal with QCoal, which operates Queensland's 10mn t/yr Byerwen, 6mn t/yr Drake and 4mn t/yr Sonoma coking and thermal coal mines and is a shareholder of Bounty. Under the deal QCoal will lend Bounty A$90mn ($61mn) and will secure an offtake agreement for 5mn t of coking coal from Cook Colliery.
The QCoal offtake agreement will start once an initial offtake agreement between Bounty and XCoal expires on 1 January 2021 and will run until December 2025 or until the 5mn t upper limit is reached.
The funds lent by QCoal will be used to repay debts owed to Amaroo and XCoal, capital expenditure at the Cook Colliery and to satisfy obligations to Switzerland-based mining and trading firm Glencore associated with Bounty's acquisition of Cook.
Bounty acquired Cook and the nearby Minyango coking coal project from the administrators of Caledon Resources in November 2018. Cook produces around 80pc second-tier hard coking coal and 20pc thermal coal and was expanded in 2016 by its previous Chinese owners to capacity of 4mn t/yr from 500,000 t/yr. It is an underground mine located about 30km from Queensland's Blackwater in the Bowen basin and has previously exported mostly to Chinese customers.
