Done deal for Dartbrook

Terms have been agreed to re-commission the Dartbrook coal mine, and it involves an alliance between three of its many suitors.

Terms have finally been agreed to re-commission the Dartbrook coal mine in New South Wales, and it involves an alliance between three of its many suitors.

The mine has been sought after because it is one of the few sanctioned and undeveloped coal assets in the country at a time when prices for the commodity have been driven to record highs.

Owner Australian Pacific Coal (AQC) said that after receiving an offer for a proposed alliance with M Resources for Dartbrook, its ongoing discussions with its largest shareholder Trepang Services with respect to AQC’s outstanding debts, and the receipt of a conditional non-binding indicative proposal from Tetra Resources and Javelin Private Capital Group, the company has entered into a binding term sheet with each of Trepang, M Resources and Tetra Resources for a strategic partnership.

The aim of the parties is to see Dartbrook rejuvenated as a coal-producing mine as soon as practicable.

Under the arrangement, M Resources and Tetra will earn a 20 per cent direct joint venture interest each in Dartbrook. In addition, Trepang – if it agrees to extend the existing AQC access and compensation agreement, various easement arrangements and term transfer of water rights on mutually agreeable commercial terms to allow underground mining operations to continue  for the duration of mine life extension approvals – will earn a 10 per cent free-carried direct joint venture interest.

AQC will retain a 50 per cent direct joint venture interest in Dartbrook.

If M Resources and Tetra do not achieve production restart at Dartbrook within 27 months, M Resources and Tetra will relinquish their joint venture interest, which will revert to AQC.

M Resources will enter into an exclusive marketing services agreement to act as marketing agent of coal sales and an exclusive logistics services agreement for all coal types produced at Dartbrook. Tetra will be appointed as the operator of Dartbrook.

The partnership is conditional on AQC’s ongoing fully underwritten entitlement offer being completed successfully, and AQC obtaining all required authorisations (including any shareholder approval) with respect to the partnership within 120 days from the date of the binding term sheet.

M Resources will be entitled to appoint a director to the board of AQC, which is also currently negotiating with Trepang to have the right to nominate up to two directors to the board for so long as Trepang maintains a relevant interest of 20 per cent in AQC.

The development effectively scuppers the bid by former Australian coal baron Nathan Tinkler, which was three times the offer by M Resources.

Editor of industrial titles and mastheads with Prime Creative Media. Publications include Rail Express and Australian Mining (web content).
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