TerraCom Ltd (ASX:TER) will acquire the Blair Athol Coal Mine, one of Queensland’s oldest coking coal mines, from the Blair Athol Coal Joint Venture for the heady price of $1.
TerraCom will also receive $80 million from the vendors to meet Blair Athol Coal Mine’s rehabilitation liability as determined by Queensland’s Department of Environment Heritage Protection in November 2015.
The mine ceased production under its current management in late 2012 and has been on care and maintenance since then.
TerraCom plans to bring the mine back into production at a rate of 2 million tonnes per annum of coal with a target of recommencing operations in the 4th quarter of 2016.
The acquisition includes the mining lease, licences, land, contracts and all mining plant and equipment, including a dragline to deliver the forecast production schedule.
Last month, the company issued 5-year 12.5% per annum interest-only bonds with a face value of US$129 million, and an additional secured note for US$12 million, as part of a debt restructuring plan.
TerraCom’s previous focus is been Mongolia, where it has fully commissioned the Baruun Noyon Uul coking coal mine, to supply to steel-producing customers.
Additionally, the company is also developing two projects in Queensland - the large thermal coal Northern Galilee Project and the high energy prime thermal coal Springsure Project.
The new acquisition, combined with TerraCom’s recent debt restructuring and it’s hard coking coal mine in Mongolia, is expected to have a materially positive impact on net assets.
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