Thai coal major jumps on to Hunnu

THAI energy giant Banpu, which acquired Centennial Coal last year, will become a 12.39% shareholder of Mongolian explorer Hunnu Coal through a $A45 million deal to purchase 30 million shares at $1.50 each – a 20.1% premium to Friday’s closing price.
Thai coal major jumps on to Hunnu Thai coal major jumps on to Hunnu Thai coal major jumps on to Hunnu Thai coal major jumps on to Hunnu Thai coal major jumps on to Hunnu

Image courtesy of Hunnu Coal.

Blair Price

Banpu also inked a strategic shareholder agreement with the Perth-based company, along with a memorandum of understanding to form a strategic partnership.

Hunnu sees the move as a vote of confidence in its management, projects and strategy, while it will use the funds to fast-track development of its Tsant Uul and Unst Khudag projects.

Banpu chief executive Chanin Vongkusolkit said the company was seeking to be a long-term player in both the growth and development of Hunnu and Mongolia’s coal industry.

“Hunnu is a well-managed business with a clear strategy and great prospects. The strategic partnership with Hunnu is an effective way for Banpu to partner with Hunnu for the long-term benefit of both companies,” he said.

“The Mongolian coal sector has great potential, with extensive coal deposits and rapidly developing infrastructure. Mongolia’s close proximity to key coal export markets such as China makes it an attractive investment destination.

“A strategic partnership with Hunnu is a lower‐risk way for Banpu to familiarise itself with the Mongolian coal industry. Establishing a strategic alliance in Mongolia is part of Banpu’s strategy to expand its position in key Asia-Pacific markets.

“We are strongly supportive of Hunnu’s management team and its current strategy.”

Hunnu managing director George Tumur introduced Leighton and Sedgman to Mongolia when he oversaw the development of the Ukhaa Khudag coking coal mine, which is ramping up to 10 million tonnes per annum of raw coal production this year.

The explorer has more than 400Mt of resources across its thermal and coking coal project portfolio in the Middle and South Gobi provinces.

Banpu will nominate a non-executive director to Hunnu’s board, allowing the big coal producer to provide operational expertise.

Since its $2 billion acquisition of Centennial last year, Banpu produces more than 40Mtpa of coal from its mines in Australia, Indonesia, China and Thailand.

Hunnu shares are up 10.5% to $1.37 since coming out of a two-day trading halt this morning.

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