Whitehaven to acquire Winchester South Project from Rio Tinto

Whitehaven Coal Limited (ASX:WHC) has entered into a binding agreement to acquire Rio Tinto’s 75% interest in the Winchester South coking coal project for total cash consideration of US$200 million. US$150 million of the consideration will be payable on completion with US$50 million be payable 12 months post completion.

The acquisition is to be funded from cash and existing facilities.

Winchester South is a large, high quality coking coal project located in Queensland’s Bowen Basin, approximately 30km south east of Moranbah. It is located in the same precinct as the tier one operating coal mines of Moranbah, Grosvenor and Peak Downs.

Whitehaven Coal Managing Director and CEO Mr Paul Flynn said “the Winchester South project is a significant strategic acquisition for the company which offers an opportunity to develop and operate a high-quality, large scale coking coal mine in one of the world’s premier coking coal basins.”

“Winchester South will form a key part of the company’s longer term growth plan and complements our Vickery project in the Gunnedah Basin as another high quality asset which will help Whitehaven respond to the strong and growing demand for premium coking coal that exists in Asian markets.”

“Whitehaven generates the greatest value for shareholders where the company can deploy its full breadth of skills across approvals, construction and operations and the Winchester South project aligns perfectly with these strengths”, Mr Flynn said.

Winchester South is well positioned from an infrastructure perspective, with one of the main rail lines in the Goonyella System transgressing the tenement and the Queensland electricity power grid nearby. Coal can be delivered by rail to either Dalrymple Bay or Gladstone for export.

The Scentre Group currently owns the remaining 25% of Winchester South.

The acquisition is subject to normal regulatory approvals and a number of other customary conditions precedent for a transaction of this nature. Completion is expected to occur in the second half of 2018.

Key Elements of the Project 

Tenure: Granted MDL183

JORC Resources1 (100% basis): A total of 356Mt comprising 78Mt in the Measured Category, 146Mt in the Indicated Category and 132Mt in the Inferred Category

Coal Seams: Leichardt and Vermont Upper in the Rangal Coal Measures and Vermont Lower in the Fort Cooper Coal Measures

Potential Mine Statistics 

Mine Life: Open cut mine of 20-30 years life with significant exploration potential

Strip Ratio: Average of 5.0:1 over the life on mine

ROM Coal Production: 7.5Mtpa to 15.0Mtpa

Product Coal:In the range of 3.5Mtpa to 7.5Mtpa dependent upon the products produced

Product Mix: HCC, SHCC, SSCC and thermal coal

Whitehaven’s full ASX release on the acquisition can be found here