Millennium is currently developing its Moranbah opencut coking coal project in Queensland’s Bowen Basin. The project contains at least 46 million tonnes of measured and indicated resources and will commence production in 2005. At full production the mine is expected to produce up to 2.5 million tonnes per annum of saleable coal.

Millennium also holds 10 million tonnes of indicated resources and 50Mt of inferred resources of PCI coal at Foxleigh North; a coking coal exploration tenement near Middlemount holding 150Mt of indicated resources and 150Mt of inferred resources; plus thermal coal exploration areas in the Surat Basin.

Excel said the agreement provided balance to its coal assets through presence in both Queensland and NSW.

Excel will acquire 21% of the company from existing major Millennium shareholders by payment of approximately A$4.6 million in cash plus the issue of 2.5 million new fully paid ordinary Excel shares, amounting to dilution of Excel’s total equity of approximately 1.3%.

These new shares will be escrowed for one year.

Excel will also subscribe for $34 million in new ordinary shares in Millennium taking ownership to 51% on a fully diluted basis. Excel has also made an offer to acquire existing shares from the minority shareholders of Millennium which could result in Excel owning up to 55% of Millennium.

Excel plans to use its new equity on the development Moranbah, expected to cost $60 million.

Excel said it would be able to fund the Millennium acquisition, along with the upcoming expansion of Wambo and the development of Wilpinjong in 2006, without the need for new equity.