Morien Resources (TSX VENTURE: MOX) said Nov. 20 that it has finalized the terms of a Letter of Intent (LOI) with an unnamed party for a coal off-take agreement from the Donkin Coal Project located in Cape Breton, Nova Scotia, Canada.
Concurrently, Morien has signed a Memorandum of Understanding (MOU) with an unnamed operating partner providing for the establishment of a Joint-Venture Agreement to develop and operate the Donkin underground (and to a certain extent under the Atlantic Ocean) project.
These milestones were precursors to making an offer to international miner Glencore-Xstrata on Nov. 4 for the purchase of its 75% interest in the Donkin Project. Morien has subsequently entered negotiations with Glencore. The LOI and MOU are conditional upon the purchase of the 75% interest, and are subject to the conversion of each into definitive contracts.
Glencore announced in April 2012 that it intended to seek an operating partner to acquire its share of Donkin. Glencore has indicated that during the current negotiations it will be minimizing expenditures at the project. Glencore indicated this involves securing the tunnel entries for a new operator.
The tunnel entries are on land, with the tunnel then quickly diving under the adjacent Atlantic Ocean, where most mining will take place. Under-seabed mining has been done before in this region, so this is not that unusual a mining plan. The project consists of a multi-continuous miner operation producing about 3.6 million tonnes per year of raw run of mine coal that would be washed to provide about 2.75 million tonnes/year of product coal that is primarily for coking coal markets, but may also supply thermal coal markets.
Morien said it views these actions by Glencore as an indication of its willingness to transition the project to new owners and Morien is confident Glencore would do nothing to damage the project given the advanced level of negotiations between the parties.
“After many months of hard work and dedication by all involved, we have reached the stage where we can undertake the last step of the transaction to develop and begin production from the Donkin Project,” stated John Budreski, CEO of Morien. “This is a win-win for all parties involved. We believe we have partnered with a first-class operator and secured a very solid sales base with an off-take partner and are pleased we can readily assist Glencore with its objective of providing a qualified operating partner to assume its interest and advance the Donkin Project to production. We look forward to working with Glencore to arrange reasonable terms for the purchase and transfer of its ownership.”
Morien is a Canadian company engaged in resource development and its principal asset is a 25% interest in the Donkin Coal Project in Nova Scotia.