Beacon Hill Resources (AIM: BHR) has announced what it said was a “transformational acquisition", taking a substantial interest and management control of a coal mine in the Tete province of Mozambique after its 49% owned associate BHR Mining Ltd agreed to buy mine operator Minas Moatize for US$35 million in cash.
The mine is the only one in the province, considered to be one of the world’s largest underdeveloped coking coal regions. Beacon Hill will immediately be granted management control with revenue generation from the producing underground coal mine with an intention to expand production to 3 Mtpa (million tonnes per annum) of saleable coal for domestic and export markets.
Beacon Hill estimates the potential revenues at US$250 million per annum and is already holding discussions with potential off-take partners including the provision of financing before entering into an agreement.
The company also has the option to up its stake in BHR Mining to 75%.
Beacon Hill’s immediate focus will be on increasing production to an average of 20,000 tonnes of saleable coal per month through the expansion of current underground production and opening a small scale open cast pit.
“This will provide near term cash flow to fund drilling programmes to further prove and expand the current resource, and subsequently maximise the potential uplift in value for our investors,” said executive chairman of Beacon Hill Justin Lewis.
Shares in the company rallied more than 11% on the news.