Indonesia tycoon Anthoni Salim’s company MACH Energy Australia Pty Ltd has reached a binding agreement with global miner Rio Tinto Plc for the acquisition of the latter’s Mount Pleasant thermal coal assets for $224 million plus royalties.
The mine has marketable reserves of 474 million tonnes.
Rio Tinto manages Coal & Allied’s coal operations, which are located in the Hunter Valley region of New South Wales, Australia. The operations include Mount Thorley Warkworth, Hunter Valley Operations and Bengalla.
“These agreements for over $800 million in asset sales deliver significant value for our shareholders with the potential for future royalties from Mount Pleasant. We believe Mount Pleasant can have a very positive future under its new owners with different priorities for development and capital allocation,” Rio Tinto Copper & Coal chief executive Jean-Sébastien Jacques said, in a press statement release on Wednesday.
With the latest transaction, Rio Tinto has now announced or completed $4.7 billion of divestments since January 2013. He added, the sale is subject to certain conditions precedent being met, including completion of the restructure of Coal & Allied and regulatory approvals, and is expected to close in the second quarter of 2016.
According to press statement, the agreement with MACH includes a payment on completion of $83 million, two unconditional deferred payments of $58 million each payable 8 and 16 months from completion, a conditional payment of $25 million and royalties, payable quarterly at two per cent of Gross FOB Revenue for coal sold from the first 625 million tons of Run of Mine coal (equivalent to 474 million tons of marketable reserves) when prices exceed $72.50/ton.
The proceeds of the sale will be used for general corporate purposes. As of June 30, 2015, the project had gross assets valued at $144 million and no profits. The sale of the Mount Pleasant mine follows Rio Tinto’s sale of its stake in the Bengalla last year for $606 million.
Hunter Valley Operations and Mount Thorley Warkworth are multi-seam, multi-pit, open-cut mining operations that produced 5.2 million tonne of semi-soft coking coal and 19.5 million tonne of thermal coal in 2015.