Coalspur Mines Ltd. (ASX: CPL, TSX: CPT), which is developing coal mine properties in western Canada, announced Feb. 24 that it has entered into a definitive agreement for the acquisition of Coalspur by KC Euroholdings S.à r.l. by way of an Australian scheme of arrangement.
KCE is the parent company of Kameron Collieries ULC, the new owner of the Donkin coal mine in Nova Scotia, Canada, and is an affiliate of the Cline Group LLC, which was founded by coal operator Chris Cline and is a major coal producer in the United States. KCE will fund the acquisition from internal cash sources. The rransaction with KCE represents the culmination of a strategic review process that was announced by Coalspur in June 2014. The competitive process resulted in the selection of KCE’s proposal which has the unanimous support of the Coalspur Board.
“After running a comprehensive, global process, the Company is pleased to enter into this agreement with KCE. Despite the challenging environment for thermal coal exporters globally, and limited capital market access for single asset developers of thermal coal projects, we have managed to run a competitive process and secured a positive outcome for all stakeholders. The agreement with KCE is the best option for our shareholders in the context of the Company’s upcoming obligation to repay its debts with EIG Global Energy Partners (‘EIG’) and Borrowdale Park S.A. (‘Borrowdale’). Cline is an industry leader with the technical capability and financial capacity to bring Vista into production,” said Gill Winckler, President and Chief Executive Officer of Coalspur.
“The acquisition of the high quality Vista asset in Alberta will combine well with our recent purchase of the Donkin mine in Nova Scotia and advances our strategy to service growing international markets through a low cost coal production platform” said Paul Vining, Chief Executive Officer of KCE, who recently left major U.S. coal producer Alpha Natural Resources (NYSE: ANR) to handle non-U.S. coal projects for Cline. “We look forward to working with key stakeholders as we develop Vista and our other international businesses.”
The deal should close by this summer.
Coalspur is a coal development company with approximately 55,000 hectares of coal leases located within the Hinton region of Alberta, Canada. Coalspur’s flagship project is Vista, which covers approximately 10,000 hectares and provides a large scale, surface mineable, thermal coal development. Vista is located adjacent to CN Rail’s main line, which is suitable for the transport of coal to deepwater ports on Canada’s west coast. Coalspur has secured a port allocation agreement with Ridley Terminals, which is essential to the logistics supply chain necessary to export coal from Vista to the growing thermal coal demand from countries in the Asia Pacific region.
KCE is a Cline affiliate put in place in 2014 to acquire, develop and operate coal mines in international (non-U.S.) markets. In August 2014, Kameron Collieries ULC, a subsidiary of KCE expanded into Canada by acquiring Glencore’s 75% interest in the Donkin coal mine in Nova Scotia. Subsequently in December 2014 Kameron Collieries ULC increased its ownership of the Donkin coal mine to 100% by acquiring Morien Resources Corp.’s 25% shareholding. Cline’s subsidiaries and affiliates control over four billion tons of reserves in the Illinois coal basin and Canada. Cline’s subsidiaries and affiliates own approximately 86% of Foresight Energy LP (NYSE: FELP) a U.S. thermal coal producer that currently operates four mining complexes consisting of four longwall mines and one room and pillar mine, all located in Illinois.