Queensland coal developer Bandanna Energy yesterday announced Korean energy group SAMTAN had completed its acquisition of a 10% equity stake in the company.
SAMTAN completed the acquisition through a $22.5 million share placement at 60 cents per share.
Bandana will use the funds to carry out further exploration at its Arcadia, Arcturus, Dingo West and Springsure Creek portfolio of thermal coal projects.
Under the terms of the agreement, SAMTAN has the right to market Bandanna’s coal in Korea and the right to negotiate purchase of 20% of the coal at market prices.
Bandanna managing director Ray Shaw told MINING DAILY the transaction would give the company a very strong financial base to carry out its exploration program.
“The concept study for the Dingo West project has been completed, while we are currently in the process of carrying out a concept study for the Arcadia and Arcturus projects,” he said.
“We already have a JORC resource of something like 1.5 billion tonnes of coal in our inventory, so we see ourselves becoming a producer within the next two to three years.
“This is clearly a fairly strong vote of confidence from a substantial player in the Korean coal market.
“This shows that they have a lot of confidence in the worth of our resources and our goals for the company in the future.”
According to Shaw, the transaction would allow Bandanna to retain a 100% interest in the projects.
“One of the neat things about this deal is that it is on a corporate level only,” he said.
“At the moment, our Alpha project in the Galilee Basin is the only one with a farm-in agreement.
“AMCI are farming-in to earn up to 50% interest by funding up to $25 million. However, while this transaction will fund exploration, it will actually leave our 100% equity base intact.”
Shaw also said the company may look for further foreign investment in the future.
“I envisage that as some the projects mature, we could look to introduce other parties using that equity to carry us through any further development,” he said.
Park Soon IL, the senior managing director of SAMTAN’s energy and resources development division, will join the Bandanna board.
Park said the SAMTAN was keen to extend its energy interests in Australia and was impressed with the quality of Bandanna’s thermal coal assets.
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