Galilee only committed to an ASX listing of ERG a week ago and will today release a prospectus for the company which contains its New Zealand coal mine and project portfolio.
Nevertheless, Bathurst views its offer, made on Monday evening, as a “significant premium to the value that Eastern was being priced in the proposed initial public offering”
Bathurst is quickly advancing its Buller hard coking coal project in New Zealand, which spans 10,000 hectares in permits that “largely surround” Solid Energy’s 2 million tonnes per annum Stockton coking coal mine.
“Our offer reflected Bathurst’s view that there were considerable synergies available to Bathurst that may not have been available to a third-party purchaser as well as offering a far greater return for Galilee shareholders than the IPO of Eastern,” Bathurst said after its failed bid.
Galilee said it was an incomplete, indicative proposal, which was dependent on Bathurst’s current $110 million equity raising plan.
Formerly known as Eastern Corporation before acquiring Queensland coal seam gas player Galilee Energy in June, the New Zealand coal producer subsequently adopted the name.
Funds from the ERG IPO will be used to advance Galilee’s CSG projects.
Bathurst plans to start mining the Escarpment deposit in its Buller project in the December quarter of 2011 to produce about 650,000 tonnes of hard coking coal in an area containing old workings.
A ramp-up to 1Mtpa is expected in 2012 when mining starts moving into an area of virgin coal.
Bathurst expects the Deep Creek prospect of the project to start up in the 2012-13 financial year.
This will double total production to 2Mtpa.
Two years later, the explorer hopes to kick off another open cut operation at the North Buller prospect to ramp up to 4Mtpa of product coal.
Bathurst shares are up 1c to 39.5c this morning while Galilee shares are up 5.5c or 29.7% to 24c.