The company will have direct input in the Middlemount management with joint owner Macarthur Coal once the $A269.5 million acquisition goes ahead as there was a growing call from customers and shareholders to retain independent coal mining companies with long-term assets, Tudor told ILN.
“What we know is there is a place for independent coal mining companies in Australia. Customers like it and shareholders like it,” he said.
“Customers like independence and reliability of supply. The recent institutional offer by Gloucester was well received which shows that shareholders like it too.
“Middlemount is arguably one of the few A-grade assets available. It has very high value products and it has a similar risk profile to Gloucester’s operations.
“Middlemount is a stand-alone entity – it operates the asset and it reports to the board. Macarthur and Gloucester will be the joint shareholders of the asset. Gloucester will have direct input both at a board and operational level.”
Tudor said Gloucester brings a 15-year record of consistently and reliably delivering coal, and it went through a “very robust process to make sure we are paying the most appropriate price for the mine”.
Gloucester reported that its institutional book build at $9.25 per share, which was announced as part of the acquisition of the 27.52% share of Middlemount, came in oversubscribed and raised $434 million.
As part of its acquisition deal, Noble Group will remain a strategic 61% investor in Gloucester as it seeks to expand outside its base in the Gloucester Basin of New South Wales after the “transformational” acquisition of Middlemount which will make it a major metallurgical coal producer, Tudor said.
Gloucester’s equity share of metallurgical coal production is expected to grow from 600,000 tonnes in FY10 to about 4 million tonnes per annum by FY14 after the acquisition of the Middlemount assets.
The company plans to make metallurgical two-thirds of its total production profile by 2014.
Next month Gloucester’s Duralie mine in NSW expects approval to expand production from 1.28Mtpa to 3Mtpa run-of-mine coal.
“We will be able to ramp up production over the next few years,” Tudor said. “We have already committed capital expenditure of $40 million on upgrades for stockpiles expansion.”
