Rio Tinto has completed the sale of its 75 per cent stake in the Winchester South coal project in Queensland to Whitehaven Coal.
Winchester South is a large, undeveloped coal project about 30km from Moranbah in the Bowen Basin. The Winchester South tenement contains 356 million tonnes (Mt) of coal resources and is expected to produce both coking and thermal coal products once developed.
The $US200 million ($260 million) deal, announced in March, comprised of $US150 million in cash and an unconditional cash payment of $US50 million, which is due in 12 months.
Whitehaven Coal managing director Paul Flynn said the Winchester South deal was a transformative acquisition for the company.
“The Bowen Basin is highly regarded as one of the premier metallurgical coal basins in the world and Winchester South will form a key part of the company’s growth plan to meet the growing demand for this product we are seeing in premium export markets in Asia,” Flynn said.
According to Whitehaven, a developed Winchester South will potentially have a mine life of 20–30 years with annual production of between 7.5–15Mt/y.
When the deal was launched, Rio Tinto chief executive Jean-Sébastien Jacques commented: “We believe this agreement for the sale of Winchester South represents the best option for the future development of the project while delivering attractive value for Rio Tinto as we continue to streamline our portfolio.”
The remaining 25 per cent of Winchester South is owned by the Spectre Group. Whitehaven has secured a deal to acquire this stake, a transaction it expects to complete this month.
Rio Tinto is also selling its interests in the Kestrel and Hail Creek coal mines and Valeria coal development project, with those deals scheduled for completion in the second half of 2018.