Stanmore Resources is raising $694.1 million through a partially underwritten renounceable entitlement offer to back its acquisition of an 80 per cent stake in the BHP Mitsui Coal (BMC) business.

Golden Investments Australia, a subsidiary of Stanmore’s 75.33 per cent stakeholder Golden Energy and Resources, has committed to subscribe for $US300m ($411 million) of its entitlements under the offer.

Petra Capital has agreed to underwrite the remaining US$206 million ($283 million).

Stanmore – which operates the Isaac Plains complex near Moranbah – has a definitive agreement with BHP to acquire its interest in BMC.

BMC owns the South Walker Creek and Poitrel operating mines and the Wards Well underground development project.

The BMC portfolio includes an 8.4Mtpa Coal Handling and Processing Plan at South Walker Creek, 9Mtpa Red Mountain CHPP in close proximity to Poitrel, two rail loops and train loading facilities, two Marion 8050 draglines, and a fleet of excavators, dozers and haul trucks.

Following the acquisition, Stanmore will have four mines and three wash-plants within a radius of about 50km.

The company said it would have the ability to increase production with limited development and ramp-up risk, and a combined 13 Mt of met coal production capacity.

The purchase price for the BMC transaction comprises
– US$1,100 million payable on completion;
– US$100 million payable six months post completion; and
– Up to US$150 million based on a revenue sharing mechanism if the average sales price
achieved is above a certain threshold over a two year period, payable within three months of the
end of the testing period (expected in CY2024)

Stanmore Resources also announced today that another $US120 million would be raised through debt through Virtue Investments Corporation and Ascend Capital Advisors.