usa aquisition

The Australian reported that Continental Coal is in discussions with the Native American group Crow Nation over the possible acquisition of a large coal deposit in Montana.

Perth based Continental has held a series of talks in the US aimed at securing a thermal coal deposit it believes could ultimately support a rare export operation.

The company already has three thermal coalmines in production in South Africa and recently secured the rights to an interest in an operating coking coalmine in Colombia.

Continental executive director Peter Landau told The Australian the company was looking to see if a deal could be done with the senior members of the Crow Nation tribe. The talks have been going since late last year.

Mr Landau said "We haven't got there yet, but it's definitely getting closer."

He said the project in the prolific Powder River Basin was believed to host about a billion tonnes of coal, which Continental would look to export to Asia if a deal were done. Thermal coal exports out of the US are rare, with all production typically used domestically.

Mr Landau said that while there was ample existing rail infrastructure to support an export project, securing port capacity along the west coast of the US and Canada was more difficult.

He said that "The resource is fine, the quality is fine and the rail is fine. He added that but if you don't have the port, that's where you'd want to have a tie-up with an Indian group which could potentially help with a port development and offtake financing."

He said the project would easily support 4 million to 5 million tonnes a year of coal production.

Mr Landau said the company had been a victim of the wider downturn in resource equities. He said that "Operationally, Conti's never looked better. Share price-wise, it's never looked worse. Unfortunately, that's the nature of the market."

Any deal over the Crow Nation asset would increase Continental presence in the Americas, following its securing of an option over a 50% interest in a Colombian coking coalmine. The operation produces about 50,000 tonnes of coal a year, but Mr Landau said that could rise to about 500,000 tonnes.

Source - The Australian