A coal mine project in Queensland’s Bowen Basin has received a $15 million boost as Chinese-owned Beijing Guoli Energy Investment buys up more of Cuesta Coal.
Already a major shareholder, Cuesta struck a deal which will see Guoli increase its stake from 36 per cent to 54 per cent.
The $15 million boost will come in two placements and will mean Guoli has invested a total of $47 million in Cuesta.
Cuesta managing director Matthew Crawford said the funding agreement strengthens the company’s balance sheet, allowing it to work towards advancing a feasibility study for the Moorlands coal project.
“This is particularly pleasing given the challenging market conditions faced by emerging coal companies and the limited availability of funding,” Crawford said.
“The continued support of Beijing Guoli will increase the likelihood of securing favourable project finance funding for the construction phase of Moorlands.”
Located 25km north-west of Clermont in the Bowen Basin, the Moorlands project stretches over an area of 1000 square kilometres and is in close proximity to already established infrastructure.
With a JORC resource of 281.1mt including 171.2 mt in the measured and indicated category, the company is targeting first production at Moorlands in 2016.
Coal will be taken by rail to the Dalrymple Bay terminal, south of Mackay.
Cuesta said the economics of the project are robust, and talks with the owners of nearby infrastructure are ongoing.
Despite the recent downturn in the thermal coal market, Crawford is confident in the long-term strength of the commodity.
Crawford said although demand has fallen, the coal business would remain sturdy into the future with China at the head of the queue for Australian coal.
“China is going to need somewhere in the order of 1 to 1.5 billion tonnes of imported coal by 2030," he said.
With Guoli using about 4 million tonnes of coal in their own power station, the potential to supply them with coal is a real possibility for Cuesta.