While Coalspur’s shares were in $1.80s territory during the better times of 2011 the recent cash offer of 2.3c per Coalspur share was a 44% premium to Tuesday’s closing price with its shares consequently up 25%, or 0.4c, to 2c within six hours of the takeover announcement.
The deal is the result of a strategic review process that began eight months ago which also considered refinancing and recapitalisation options along with the outright sale prospect.
Coalspur president and CEO Gill Winckler said the offer by Cline subsidiary KCE was the best option for its shareholders in the context of repaying the company’s debts.
The West Perth-based company’s fortunes were tied to its flagship Vista thermal coal project in Canada’s Alberta province. The company found it difficult to obtain finance, as the worst thermal coal price downturn in decades rolled on.
“Despite the challenging environment for thermal coal exporters globally, and limited capital market access for single asset developers of thermal coal projects, we have managed to run a competitive process and secured a positive outcome for all stakeholders,” Winckler said.
“Cline is an industry leader with the technical capability and financial capacity to bring Vista into production.”
KCE CEO Paul Vining said the company was looking forward to developing Vista.
“The acquisition of the high quality Vista asset in Alberta will combine well with our recent purchase of the Donkin mine in Nova Scotia and advances our strategy to service growing international markets through a low cost coal production platform,” he said.
The Vista project hosts almost 304 million tonnes of marketable coal reserves across its 10,000ha expanse.
The project benefits from favourable port and rail logistics infrastructure with Coalspur once envisioning first production in 2015 and an eventual ramp up to 12 million tonnes per annum over a 30-year mine life.
The takeover offers is subject to various conditions, including KCE securing Vista-related rail and port contract amendments, with Coalspur shareholders expected to vote on the deal around mid-March.
Coalspur hopes to get all approvals and implement the transaction by early May.