Stanmore and Peabody strike $500m-plus Wards Well deal

Stanmore Resources is selling the southern portion of its Wards Well tenement to Peabody in a deal potentially worth more than $500 million in cash and royalties. Peabody's North Goonyella mine is adjacent to the area being carved out and the deal includes infrastructure sharing concessions that ease Stanmore's path to development for its Lancewood project. Stanmore acquired Wards Well last year along with a package of other BHP Mitsui Coal assets in the Bowen Basin, including the Poitrel mine and South Walker Creek mine. Its sale to Peabody will draw an upfront payment of about $US136 million (or $216 million Australian) and a contingent capped royalty stream up to about $US200 million ($318 million) payable on the first 120Mt of coal mined. Further royalties would be owed beyond the 120Mt mark and Peabody will pay the stamp duty costs associated with the transaction, expected to be about US$8.1 million ($12.87 million). Stanmore will retain the Lancewood tenement and the northern part of the Wards Well tenement. Related: Stanmore eyes low-cost greenfield opportunity Its agreement with Peabody will allow Stanmore to utilise latent capacity or expand any North Goonyella infrastructure - allowing it to minimise the start-up capital required for the development of Lancewood. “This is an exciting transaction for Stanmore as it continues to realise value from the assets acquired from BHP in 2022," Stanmore chief executive officer and executive director Marcelo Matos said. "The transaction achieves the monetisation of the southern part of the Wards Well tenement, which would unlikely be mined by Stanmore for many years and would be most logically mined via the existing Peabody North Goonyella workings. Stanmore CEO and executive director Marcelo Matos. "Furthermore, substantial high-quality hard coking coal resources will be retained in the northern parts of the Wards Well tenement with the transaction providing optionality to minimise the start-up capital for the development pathway of Lancewood, before potentially moving underground into Wards Well North thereafter. "The agreement on a framework of collaboration arrangements provides a pathway to other potential cooperation opportunities to facilitate value accretion in the broader portfolio.” Lancewood has a JORC Resource of 249Mt and Wards Well has a JORC Resource of 1168Mt, including 485Mt of measured premium coking coal resource. The royalty payments under the agreement will only be made if Peabody commences mining in the area (which it is under no obligation to do) and are contingent to coal price and payback of the Wards Well investment by Peabody. The parties will work together to seek a boundary realignment of the relevant Wards Well tenements in order to enable the sale of the Wards Well ML blocks south of the agreed line. Stanmore said that if a boundary realignment could not be achieved, the site would be transferred to Peabody and the northern part of the Wards Well tenements (above the agreed line) leased back to Stanmore.

Stanmore and Peabody strike $500m-plus Wards Well deal

Industry Queensland

Related News

State backs Isaac Country Universities Centres

HPI animation doing the rounds for safety

Megatrends report points to mining tech revolutions

Get access to breaking mining news, now.