PERTH (miningweekly.com) – ASX-listed junior Stanmore Coal has secured export capacity for its The Range project from the Wiggins Island Coal Export Terminal Expansion Phase 1 (WEXP1).
A capacity commitment deed (CCD) has set out the framework for how coal producers involved in the 32.2-million-ton-a-year WEXP1 could progress the project to financial close, and ultimately execute binding take-or-pay contracts.
Stanmore has secured an initial five-million tons a year of port capacity under its CCD with the WEXP1.
The planned capacity for the WEXP1 has been allocated to four coal producers, and each proponent has entered into a CCD, supported by a bid bond setting out their intentions to meet their proportional share of the early works costs up to financial close.
Stanmore’s share of these costs would amount to some A$44-million, the miner said on Thursday, of which A$26-million was provided at the time of the CCD execution with the remaining A$18-million would be payable later this calendar year, in accordance with the WEXP1 financing plan.
Stanmore executed a A$36-million subscription cooperation agreement with Greatgroup Investments, consisting of a A$27.01-million placement of more than 40-million shares, and a A$9.03-million placement of zero-coupon notes, convertible to 13.37-million shares.
Following the transaction, Greatgroup Investments's owner Sprint Capital Partners would hold a 19.99% interest in Stanmore.
The company also entered into a A$25-million bank guarantee and senior debt facility with Credit Suisse to meet the capital commitment obligations associated with the export capacity.
“Confirmation that The Range [project] has been selected for port and rail allocation is a major milestone for the company. It demonstrates a viable pit-to-port infrastructure solution to transport the five-million tons a year of export-quality thermal coal from The Range to export markets,” said MD Nick Jorss.
He noted that, coupled with the capital raising, this positioned the company to drive The Range project into production.
“The bankable feasibility study is progressing well, our key land acquisition negotiations are advanced and the mining lease is expected to be granted in the first half of 2013,” he said.
The Range is estimated to have a total Joint Ore Reserves Committee-compliant resource of 229-million tons, of which 151-million tons is in the indicated category and 78-million tons in the inferred category. A prefeasibility study into the project has projected a five-million-ton-a-year operation, over a life-of-mine of 26 years.