dj news wire on sale, a brilliant deal imo, page-3

Sorry not sure how that got there, should have been at the top of page before article and should have read 'This deal is amazing' sorry for the confusion.


(Adds India, Australia deal history, Adani comments)


By Ross Kelly
Of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)--Linc Energy Ltd. (LNC.AU) said Tuesday that it has sold its Galilee thermal coal property in Queensland state to India's Adani Enterprises Ltd. (512599.BY) for A$500 million plus royalties, in the biggest corporate investment by India in Australia, as the fast-growing nation tries to plug gaps in its energy supply.

Attempts to sell another of Linc's non-core properties, Emerald, can intensify now that Galilee is sold, and Linc Chief Executive Peter Bond said he's confident a sale of Emerald is "not too far off." Emerald contains a mix of coking coal and thermal coal.

The royalty rate is A$2 a metric ton, indexed to Australia's consumer price index, for the first 20 years of production from any mine built on the property, creating "a total cash stream of approximately A$3.0 billion," Linc said.

The breakthrough ends years of frustration for Brisbane-based Linc, after two previous attempts to sell coal properties in Queensland to Chinese entities, including Galilee, collapsed at an advanced stage of negotiations.

The sale gives Linc funding to develop its budding coal gasification and gas-to-liquid fuels businesses.

As one of the world's fastest growing economies, India currently has to import coal because it doesn't produce enough to meet increasing demand.

According to government data, India is estimated to face a coal shortage of 52 million tons this fiscal year and power utilities have been asked to import 35 million tons of the fuel.

Linc said the Galilee property could support a development producing 60 million tons of coal each year.

India aims to nearly quadruple the annual addition to power generation capacity over the next few years, to 13,000 megawatts each year from around 3,500 MW now, to power rural households and prevent blackouts.

According to data provided to Dow Jones Newswires by Dealogic, the next biggest Indian corporate investment in Australia is Tata Steel Ltd.'s A$96 million purchase of a stake in Mozambique-focused Australian coal miner Riversdale Mining Ltd.

The biggest single Indian investment in Australia, however, remains PetroNet LNG Ltd.'s agreement last year to buy liquefied natural gas from Exxon Mobil Corp. for 20 years from the massive Chevron Corp.-operated Gorgon project in Western Australia.

Adani said it has obtained approval for the Linc deal from Australia's Foreign Investment Review Board, and has also been awarded "preferred proponent status" by relevant authorities to develop a 30 million-60 million-ton-a-year coal terminal near the existing Hay Point and Dalrymple Bay terminals at the port town of Mackay.

Speculation that Linc would seal a deal with Adani firmed in recent weeks after Bond confirmed Linc was talking to the Indian group, which raised US$850 million through a late July share issue.

The deal is the latest in a flurry of corporate activity in Australia's coal sector, following last year's Chinese takeover of Felix Resources Ltd. and this month's offer by Thai miner Banpu PCL (BANPU.TH) for Centennial Coal Co. (CEY.AU).


-By Ross Kelly, Dow Jones Newswires; 61-2-8272-4692; [email protected]


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(END) Dow Jones Newswires

August 03, 2010 05:09 ET (09:09 GMT)