New Hope bolsters Bengalla mine stake
NEW Hope Corporation will buy out Westfarmers’ 40 per cent interest in the lucrative Bengalla Joint Venture for $860 million.
This represents a slight discount on the $865m New Hope paid for its original 40 per cent stake at the bottom of the market in 2016.
New Hope’s acquisition of the original 40 per cent interest in Bengalla from Rio Tinto in March 2016 – a few months prior to the start of the recent coal price surge – was perfectly timed.
New Hope ended months of speculation when it reached a binding commitment with JV partner Wesfarmers in August this year, with its share price rocketing from $3.19 to $3.54 on the news; its highest level since January 2014.
Following completion of the transaction – a combination of cash and new debt – which is anticipated to occur in late 2018, New Hope will own up to an 80 per cent interest in Bengalla.
“The acquisition of an additional interest in Bengalla demonstrates New Hope’s long term commitment to the Bengalla mine and a positive outlook for the global export thermal coal market,” New Hope managing director Shane Stephan said.
The highly profitable Bengalla thermal open cut mining operation, south west of Muswellbrook in the Hunter Valley region of NSW, has regulatory approval for up to 15 million tonnes per annum run-of-mine capacity.
Wesfarmers managing director Rob Scott said the agreement to sell its interest in Bengalla finalised the conglomerate’s exit from resources, following the sale of the Curragh coal mine to Coronado Coal in March this year.
“We believe this agreement with New Hope is in the best interests of our shareholders and ensures a smooth transition in the ownership structure of the Bengalla joint venture,” Mr Scott said.
“Bengalla has made strong returns for Wesfarmers shareholders since our initial interest was acquired in 1991 and it is pleasing the extensive, disciplined and patient review of our coal businesses has resulted in outcomes which reflect the value of these world-class assets”.
Mr Stephan also stated that New Hope remained committed to securing approval for the continuation of its other key asset, the New Acland mine in southern Queensland.
New Hope is still seeking approvals to begin development of the $900m New Acland extension, which is back in the Land Court for further consideration after the Queensland Supreme Court overturned an earlier ruling opposing the expansion in May this year.
“The acquisition of an additional interest in Bengalla demonstrates New Hope’s long term commitment to the Bengalla mine and a positive outlook for the global export thermal coal market.”