Stanmore Resources to Acquire Remaining 50%Interest in Eagle...

Stanmore Resources to Acquire Remaining 50%
Interest in Eagle Downs and 100% Interest in
Eagle Downs South
Page 1 of 16
Stanmore Resources Limited (“Stanmore” or the “Company”) (ASX:SMR) is pleased to announce it has signed a
definitive sale and purchase agreement with Aquila Coal Pty Ltd and Aquila Exploration Pty Ltd (together,
“Aquila”), both wholly owned subsidiaries of China Baowu Steel Group Corporation Limited, to acquire the
remaining 50% interest in the Eagle Downs metallurgical coal project (“Eagle Downs”), as well as the Eagle Downs
South metallurgical coal tenements (“Eagle Downs South”) and associated assets (together, the “Assets”) (the
“Transaction”).
As announced to the ASX on February 12, 2024, Stanmore entered into agreements with a wholly owned
subsidiary of South32 Limited (“South32”) to acquire South32’s 50% interest in Eagle Downs and 100% interest in
Eagle Downs Coal Management ("South32 Transaction"). At the time, Stanmore was in discussions with Aquila to
acquire part of Aquila’s interest in Eagle Downs and Eagle Downs South.
Transaction Overview
Consideration payable to Aquila in connection with the Transaction comprises:
• In relation to the Eagle Downs interest,
o US$15 million payable in cash upon Completion ("ED Upfront Consideration");
o US$20 million payable upon first 100Kt of coal being mined from longwall mining methods; and
o A capped royalty of up to approximately US$150 million payable in the future linked to average coal
index price thresholds. Different to the South32 transaction, Stanmore is not required to assume any
additional royalties to third parties.
• In relation to Eagle Downs South,
o A$2 million payable in cash upon Completion ("EDS Upfront Consideration"); and
o A$10 million payable upon first 100Kt of coal being mined from longwall mining methods at Eagle
Downs.
Highlights
• Stanmore has entered into definitive binding agreements to acquire the remaining 50% interest in the
Eagle Downs metallurgical coal project and 100% interest in the Eagle Downs South tenements from
Aquila, resulting in Stanmore’s 100% ownership of both projects
• Consistent with the South32 deal, consideration for the Eagle Downs interest comprises an upfront
payment, together with contingent payments linked to first longwall coal and a capped royalty stream
contingent to coal price thresholds
• Consideration for the Eagle Downs South interest comprises an upfront payment, together with
contingent payments linked to first longwall coal at Eagle Downs
• The acquisition results in the Assets becoming part of Stanmore’s consolidated group and will add
additional resources to Stanmore’s portfolio of high quality, metallurgical coal assets
Page 2 of 16
Stanmore will fund the ED Upfront Consideration and EDS Upfront Consideration with existing liquidity.
Completion of the Transaction is expected during 2H 2024, following the satisfaction of certain limited conditions
precedent, including but not limited to Foreign Investment Review Board approval, Chinese regulatory approval
and certain third-party consents.
Marcelo Matos, Chief Executive Officer and Executive Director, added:
“In acquiring 100% of the Eagle Downs assets Stanmore has full control over the development plan and is able to
streamline management and fully leverage its strong technical capabilities, as well as unique infrastructure and
logistics portfolio to unlock the value of the asset to its full extent. Stanmore will seek to optimise the development
plan and take a capital efficient approach to any future development decision.”
Transaction Rationale
The Transaction will allow Stanmore full ownership and control over the Assets and streamline the process to a
development decision. The Company will now continue the evaluation of the Assets with a final optimisation
study undertaken on a 100% ownership basis, including the potential to reduce the overall development costs for
Eagle Downs by leveraging Stanmore’s existing Poitrel and/or Isaac Plains infrastructure and rail and port
portfolio.