Proactive Investors - Thungela Resources Limited said it has entered into agreements to acquire a controlling interest in the Ensham coal mine, located within the well-established and infrastructure-enabled southern Bowen Basin in Queensland, Australia.
The South Africa-based energy firm said it will acquire the controlling interest through its wholly-owned subsidiary, Thungela Resources Australia Pty Ltd, and will loan fund a portion of their co-investors' - Audley Energy Limited and Mayfair Corporations Group Pty Ltd - equity contributions. The Ensham coal mine is the primary asset of the Ensham joint venture which is currently 85% owned by Idemitsu, with the remaining 15% owned by LX International.
Thungela Resources Australia Pty Ltd will acquire a majority shareholding interest in Sungela Holdings Pty Ltd, a newly incorporated private company which will, in turn, through its wholly owned subsidiary Sungela Pty Ltd acquire an 85% interest in the Ensham joint venture from Idemitsu.
The transaction comprises a subscription of A$267mln by Thungela Australia for an initial 75% shareholding in Sungela Holdings and a mezzanine loan of A$68mln from Thungela to the co-investors which, in turn, will use such funds and their own capital to subscribe for a 25% shareholding in Sungela Holdings for a total contribution of A$73mln.
The Ensham coal mine is an underground operation that produced approximately 3.2mln tons of high-quality, low-ash and low-sulfur thermal coal in 2022 and has the potential for increased production in the future. It has a life of mine through to approximately 2039 and operates using bord and pillar underground methods. The coal produced is loaded onto trains via a 13-kilometre dedicated rail spur and transported to the port of Gladstone where it is exported, primarily to Asian markets.
The acquisition provides Thungela with an attractive entry point into Australia, a leading mining geography, and to a mining basin with well-established port and rail facilities. Additionally, the Ensham mine's bord and pillar underground method using continuous miners is well aligned with Thungela's operational methodology deployed across its underground mines in South Africa.
The Ensham coal mine also produces high-quality coal, with a potential life of mine of approximately 16 years, making it an attractive, long-life potential asset.
The acquisition of the Ensham coal mine will also allow Thungela to capitalize on the current strong Newcastle coal price environment. The Ensham coal mine is a highly cash-generative thermal coal asset and will provide Thungela with a solid platform for growth and further geographic diversification.
The acquisition aligns with Thungela's strategy to pursue geographic diversification and delivers on its investment evaluation criteria of responsible stewardship, upgrading its asset portfolio, and maximizing shareholder value. It also provides the company with a step towards de-risking its underlying business and bolstering its resilience, recognizing the ongoing infrastructure challenges in South Africa, the company concluded.