Anglo Pacific selling Canadian coal reserve to Atrum Coal

Anglo Pacific Group PLC (LSE: APF, TSX: APY) said Aug. 28 that it has entered into a definitive agreement with Australia’s Atrum Coal NL (ASX: ATU) to sell its interest in the Panorama Coal Project in western Canada.

The total consideration under this deal is made up of US$500,000 cash payable to Anglo Pacific on completion, together with 1,000,000 Atrum shares and a deferred consideration of US$2.0m in the form of a 12-month promissory note with an interest coupon of 8%. In addition, Anglo Pacific will retain a royalty on coal sales from the assets being sold equivalent to the higher of 1% of gross revenue on a “mine gate” basis or US$1/tonne. Completion is anticipated to occur by Sept. 2.

The Panorama Coal Project is about 15 kilometers west of Atrum Coal’s Groundhog Anthracite Project in British Columbia and is believed to have anthracite-bearing potential.

Commenting on the transaction, Julian Treger, Chief Executive Officer of Anglo Pacific, said: “This transaction is consistent with Anglo Pacific’s strategy of monetising equity investments and growing our portfolio of royalties. We look forward to working with the Atrum Coal management team on the development of these coal properties in Canada.”

Anglo Pacific is a global mining royalty company. Its strategy is to create the premier base metals and bulk materials listed royalty company, focusing on accelerating income growth through acquiring royalties on projects that are currently cash flow generating or are expected to be within the next 24 months.

Atrum Coal Executive Director Russell Moran said in an Aug. 29 statement: “The Groundhog coalfield in British Columbia, Canada boasts the world’s largest high grade and ultra-high grade anthracite endowment and we now own all the known anthracite-bearing tenure. Our long term strategy is to ultimately become the world’s largest exporter of high grade and ultra-high grade anthracite.”

The acquisition includes 20 granted coal licences and one coal licence application, collectively covering an area of 10,235 hectares, and represents the complete consolidation of all the known anthracite-bearing tenure in the Groundhog and Panorama coalfields.

Atrum Coal said the coal licenses that are being acquired have been under-explored and could hold significantly more anthracite than has been reported. Furthermore, it is likely that the mine plan at Groundhog North, which underpins the recent pre-feasibility study, can be extended as the anthracite seams continue west into the new coal licenses.

As a matter of priority, the company plans to incorporate the newly acquired coal licences into the upcoming pre-feasibility study revision for Groundhog North.

Atrum Coal VP Operations Ben Smith commented: “The additional tenure adds a significant amount of upside to an already impressive resource. Our planned initial mine, Groundhog North, will already be a large mine. However, this occupies only a relatively small area compared to the overall tenure available to us. The Anglo tenement acquisition adds even further to this.”

Atrum Coal said it has recently embarked on an extensive marketing effort in Korea, Japan and China to potential customers for this coal. These discussions were very successful, the company noted.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.