Australia-listed Guildford Coal has agreed to sell its Australian coal assets to Singaporean investment firm Sino Construction for A$25mn ($23.25mn), although Guildford will remain the sole manager of the assets it is selling.
The assets include the undeveloped thermal and coking coal deposits Clyde Park, Pentland, Springsure and Hughenden, located in the Galilee and Eromanga basins in Queensland. Other assets include the Sunrise project in the Surat basin in Queensland, the Monto project in the Nagoorin Graben basin, the Sierra project in the Bowen basin and the Kolan project in the Maryborough basin.
Guildford has put the development of its Australian coal assets either on hold, or dramatically slowed down their rate of progress, since thermal and coking coal prices started their downward trend three years ago. It has turned its focus to Mongolia, where it is developing the Baruun Noyon Uul coking and thermal mine in the South Gobi region, with production expected to start before the end of the year.
The acquisition price will consist of $25mn payable by a way of a non-interest bearing convertible promissory note, which matures in six months after issue, Guildford said. A royalty of 35¢/t of coal sold from all of Guildford's Australian coal assets will be paid by Sino, with the royalty payable for five years from the date at which coal production starts.
The deal is subject to Sino completing its due diligence, as well as the relevant approval from regulatory authorities being gained, Guildford said.
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