But the commercial terms of its $40 million investment in the project is set to change, according to a statement by NuCoal.
“The final condition precedent for the investment is the obtaining of regulatory approval by the termination date, being June 30, 2013,” NuCoal said in a statement.
“Negotiations with MMI have been successfully conducted between both parties to extend the conditions precedent date from June 30, 2013, to June 30, 2014. The extension of time is subject to a number of materially changed commercial terms applying.”
The changes to the commercial terms are now being legally documented and the company will announce the revised terms once board approval by both parties has been obtained, NuCoal said.
NuCoal chairman Gordon Galt said the negotiations with MMI had been conducted in good faith.
“NuCoal looks forward to finalising the legal documentation required to formalise the in principle agreed position,” he said.
“NuCoal will continue to work towards achievement of the remaining condition precedent so that the transaction can be finalised and NuCoal and MMI can continue to develop the Doyles Creek Project as joint venture partners.”
The key terms of the initial joint venture farm-in agreement provide MMI the right to earn equity of up to 10% by spending up to $40 million on the project.
After the completion of a bankable feasibility study, MMI will have an option to purchase an extra interest of up to 10% in the project at a pre-determined valuation dependent on the level of end-user offtake commitment made at the time the option is exercised.
MMI will be entitled to exclusively introduce coal from the project to its customers in Japan.
Former NSW energy and resources minister Ian Macdonald “essentially gifted” the Doyles Creek exploration lease to former secretary of the mining union John Maitland and other mates without the advice of his department, the state’s watchdog heard in March.
Counsel assisting the inquiry Peter Braham, SC, told the Independent Commission Against Corruption hearing in Sydney that there was a “real delinquency on the part of the minister in the discharge of his public office” in granting the leases to Doyles Creek Mining and Maitland, who saw his investment in Doyles Creek of $166,000 turn into $15 million.
“The state gained almost nothing for this disposition of hot property to Mr Maitland and his associates,” Braham said.
“On any view, it has been a financial disaster for the people of NSW and a gold mine for the entrepreneurs.”