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Cockatoo Coal sells 49% of Woori coal project to Mitsui Coal for $37m

Published: 14:03 08 Jul 2011 AEST

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Cockatoo Coal (ASX: COK) will sell a 49% participating interest in the Woori coal project to Mitsui Coal Holdings Pty Ltd for A$37.25 million, struck at a price of $0.90 per Measured Resource tonne, higher than the company's current enterprise value of $0.30 per tonne.

The deal will enable the joint venture, the North Surat JV, to be a frontrunner in the development of coal mines in the Surat Basin in Queensland.

The agreement was reached to consolidate the Collingwood, Taroom and Woori coal projects into one joint venture activity to be managed by Cockatoo, and is subject to certain conditions precedent.

The scope of the consolidated joint venture is to progress the completion of a Feasibility Study which will assess the three projects.

Mitsui currently owns 49% of the Collingwood and Taroom projects and this Woori transaction will equalise the ownership of these three most significant projects in the Surat Basin.

The combination of the three world class assets of Collingwood, Taroom and Woori into a single joint venture will allow Cockatoo and Mitsui to have a strong presence in the development of the Surat Basin province.

The North Surat JV holds the company's two development projects which are closest to the Surat Basin Rail corridor, and the large defined resources hold significant opportunity to maximise economies of scale.

The Feasibility Study will determine the optimum development program and schedule for the North Surat JV in accordance with available infrastructure, on or before 31 December 2013.

Mitsui is to be appointed the exclusive marketing agent for coal produced by the North Surat JV with marketing rights worldwide except for South Korea, which shall remain the domain for Cockatoo and its marketing partner, SK Corporation.

Mitsui will acquire a 49% interest in the following assets:

- MDL 187, MLAs 50247 and 50248, EPC 1322, EPCA 2207 (where Surat Coal is preferred applicant) and EPCA 2473 (where Surat Coal is a competing applicant);
- Mining information associated with the above tenements;
- Freehold land owned by Surat Coal located at the Woori project; and
- Cockatoo’s rights in respect of Wiggins Island Coal Export Terminal (WICET) and Surat Basin Railway (SBR) capacity applications in respect of Woori.

Completion of the agreement is subject to a number of conditions including: Mitsui obtaining FIRB approval for the Woori acquisition along with the indicative DERM approval for the proposed transfer of the Woori project tenements and existing environmental authorities.

Cockatoo Coal's Surat Basin projects cover an area of about 4,000 square kilometres. The Woori and Tin Hut Creek projects comprise the Juandah Coal Measures.

The Taroom and Collingwood projects and the Bottle Tree and Krugers prospects are located within the Taroom Coal Measures.

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