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Thermal coal project to be acquired

Thermal coal project to be acquired

Bruce Adkins, Corrs Chambers Westgarth

Two firms are advising on the acquisition of the Mount Pleasant thermal coal project in NSW.

Firms: Corrs Chambers Westgarth (MACH Energy Australia Pty Ltd); Allens Linklaters (Rio Tinto)

Deal: MACH Energy Australia has agreed to acquire the Mount Pleasant thermal coal project from Rio Tinto.

Value: $320 million, plus royalties

Area: M&A

Key players: The Corrs Chambers Westgarth team was led by partner Bruce Adkins (pictured) with support from special counsel Stuart Clague and lawyer Ben Pattison. Partner Christine Covington led the Corrs Chambers Westgarth team advising on the environment, water and property aspects of the transaction.

Deal significance: Mount Pleasant is a large-scale thermal coal asset in the Hunter Valley region of NSW with total marketable reserve of 474 million tonnes.

Under the binding agreement, MACH Energy Australia will acquire Mount Pleasant from Rio Tinto for US$224 million (A$320 million), plus royalties.

The purchase price includes a completion payment of US$83 million, two unconditional deferred payments of US$58 million and a conditional payment of US$25 million.

The royalty component is payable quarterly at two per cent of gross FOB revenue for coal sold from the first 625 million tonnes of run-of-mine coal (equivalent to 474 million tonnes of marketable reserves) when prices exceed US$72.5/tonne.

Corrs Chambers Westgarth lead partner Bruce Adkins said: “This is a significant transaction and represents a vote of confidence in the Australian coal sector.”

Completion of the transaction is expected by the second quarter of 2016 and is subject to certain conditions precedent being met, including completion of a restructure of Coal & Allied and regulatory approvals.

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