http://www.chinamining.org/Investment/2011-06-24/1308878057d47010...

http://www.chinamining.org/Investment/2011-06-24/1308878057d47010.html

Guangdong investor seals $502 mil Caledon coking coal resource deal.
(Platts)
Updated: 2011-06-24 09:13

Guangdong Rising Assets Management, a Chinese state-owned investment group, has agreed a GBP313 million ($502 million) takeover of Australian coking coal mine operator Caledon Resources, the ASX and UK-listed company said Thursday.

Gram agreed a GBP1.12/share cash deal, taking ownership of the Cook coking coal colliery in Queensland, the nearby Minyango mine development project undergoing feasibility studies, and port usage rights.

"Gram has recently been seeking to acquire coal assets to satisfy demand for coal in Guangdong province and its adjacent provinces. Gram is attracted to Caledon's resource of coking coal, infrastructure access, rail and potential port capacity," the Chinese company said in a statement to the Australian Securities Exchange Thursday.

The price agreed is a premium of 53% to Caledon's 20-day weighted average share price of GBP0.73pence/share on the London Stock Exchange's AIM market for the period to November 5, 2010, the day before the acquisition was announced to the market.

Caledon in March announced it increased Cook's marketable coal reserve estimate by 115% to 47.7 million mt. At Minyango, Caledon increased the project's coal resource estimate by 874 million mt, or 256%, to 1.216 billion mt in December. An exploration drilling program was undertaken between June 2009 and September 2010 at the site some 15 km north of the Cook mine.

Washplant simulations indicated that the Minyango project could generate a primary coking coal product of 7.5-8% ash with low to moderate sulfur and phosphorous and a secondary thermal product of 15% ash, the company said at the time.

WIGGINS ISLAND 4 MILLION MT EXPORT CAPACITY

Caledon has 4 million mt/year of export capacity in the Wiggins Island coal terminal at Queensland's Gladstone port which is due to open in 2014. Its Cook underground mine had coal sales of 535,000 mt in 2010, split between coking coal comprising 80% of volumes and thermal coal for the rest.

The acquisition will "provide [Gram] a platform for future expansion in Australia and the region," the Caledon statement said.

Gram and Caledon have been in takeover talks since last November, and the acquisition took longer than anticipated to complete because the parties had to wait for approval from Chinese regulatory authorities including the National Development and Reform Commission, which eventually came through in June.

Gram holds assets worth GBP62 billion and is the second largest shareholder in China Telecom and it recently acquired a 19.9% stake in PanAust, an Australian-listed copper and gold company for A$215 million in 2009, said the statement.

"The offer was recommended by Caledon's board. Gram has secured irrevocable undertakings and letters of intent from shareholders and directors representing a total shareholding of 53.5% in Caledon," said Gram in its statement to the Australian Securities Exchange.

Polo Resources, holder of a 29.8% stake in Caledon, abandoned takeover talks with the Queensland coal miner in June last year after failing to agree terms. It stands to get GBP 100 million in the deal and expects to pay a special dividend to shareholders as well as target investment in iron ore coal and gold assets, it said in a statement.

Ord River Resources, an Australian-listed company whose largest shareholder is China Nonferrous Metal Group, holds an option to acquire a 10% interest in Caledon on completion of the takeover by Gram.

Ord River and Gram intend to form a joint venture company in Australia to focus on minerals exploration and mining investments in Australia and the Asia Pacific region, according to Ord River's website.