Centennial said future capital requirements at Angus Place, including a new longwall to be installed in late financial year 2008, will be met by the new joint venture, thereby reducing Centennial’s forecast capital expenditure.
The two buyers, which are also Centennial’s JV partners at the neighbouring Springvale mine, will pay the company $65 million in cash plus $2 per tonne of coal mined from the Neubeck’s Creek and Wolgan Road projects.
Centennial will also receive a royalty of $2 per tonne over the balance of undeveloped resources.
Last week Centennial chairman Kenneth Moss told shareholders the company’s performance over the past year had been disappointing, but reassured them Centennial was now on track to focus on its major profit drivers.
He said that over recent weeks much of the discussion surrounding Centennial had focused on its Central Coast mines, which have recently undergone a major restructuring.
“However, this risks leaving shareholders with a distorted picture of the overall group; in particular this ignores the very strong performance of a number of Centennial’s mines, including new production and development records achieved at Angus Place, Springvale and Mandalong during the year,” Moss said.
The company said today the new joint venture would create further opportunities to maximise synergies between Springvale and Angus Place, with enhanced sharing of infrastructure, technical services and other resources, resulting in greater production efficiency and marketing optimisation.
“The sale of a 50 percent interest in Angus Place is the third leg of Centennial’s strategy announced in February 2006, and follows the recently announced Central Coast restructure and the acceleration of Mandalong’s expansion to increase the group’s export market participation.”
Consistent with Centennial’s strategy to “operate large world-class mines, with higher margins based on increased operating efficiencies and market-based pricing” Moss said its Western operations at Springvale and Angus Place would be key players in driving the growth pipeline.
The sale is expected to be completed by the end of March 2007.
