kangaroo resources strike indonesian coal deal

INDONESIAN giant PT Bayan Resources Tbk has sewn up a controlling stake in coal-focused Kangaroo Resources via a $277 million scrip deal.
Shares in Kangaroo jumped more than 10 per cent this morning after it unveiled a deal to acquire 99 per cent of the Pakar thermal coal project, a developed operation in East Kalimantan, Indonesia, from Bayan for $277m in scrip, or 2.3 billion shares.

The deal would hand PT Bayan, a $4.5 billion Indonesian-listed coalminer, 57 per cent of Perth-based Kangaroo, which also has base metals and gold interests in Australia.

The agreement is subject to due diligence to be carried out in the next 30 days, regulatory approval and Kangaroo obtaining shareholder approval.

Under a separate memorandum of understanding, Bayan will also immediately take operational control of Kangaroo?s Indonesian projects, including the 100 per cent-owned and producing Mamahak coking coal project and the thermal coal projects, Tanur Jaya and GPK.

Start of sidebar. Skip to end of sidebar.
.End of sidebar. Return to start of sidebar.
Kangaroo managing director Mark O?Keeffe labelled the transaction a ?company-changing? event and the best option to unlock the value of its Indonesian assets.

?We are confident that this transaction represents the best strategy,? he said.
Shares in Kangaroo cooled to last trade flat at 19c, giving it a market value of about $160m, after hitting a high of 24.5c.

Kangaroo said it had recognised that in order to become a major Indonesian coal producer in the medium term it needed to secure significant coal assets, a strategic partner with the skills to develop them and a strong balance sheet.

As part of the deal, Bayan will also pump $US18m into Kangaroo, which along with a recent $23.8m placement to strategic investors, would boost Kangaroo?s cash position to $61m.

Kangaroo has commissioned an independent expert to consider the valuation of the Pakar project, which hosts a JORC resource of 3.8 billion tonnes of coal, within the company.

Pakar is expected to move into production in 2011, which Kangaroo said Bayan has the skills and experience to make happen.