Stanmore Resources raises funds to buy the ‘B’ in BMC

Stanmore Resources’ strategy for the purchase of BHP’s interest in BHP Mitsui Coal (BMC) is almost complete. Stanmore has secured US$625 million funding for the buy out. The Debt Facility is described as ‘a senior secured, first-lien amortising loan note facility which matures five years from first utilisation.’ Stanmore Resources owns and operates the Isaac Plains Complex in the Bowen Basin which includes the Isaac Plains Mine and processing facilities, the adjoining Isaac Plains East and Isaac Downs mining areas and the Isaac Plains Underground Project. Related: Stanmore snaps up BMC coal mines in $1.8b deal Stanmore Resources is a 50 per cent shareholder in the Millennium and Mavis Downs Mine and holds a number of additional high-quality prospective coal tenements located in Queensland’s Bowen and Surat basins. Stanmore Resources owned Isaac Plains operation The Debt Facility is guaranteed by and secured against all assets of the borrower, which is described as Stanmore SMC Holdings Pty Ltd, a wholly owned subsidiary of Stanmore Resources. Announcement made in November In November BHP announced it was divesting its 80 per cent interest in BHP Mitsui Coal (BMC). “Stanmore SMC Holdings Pty Ltd, a wholly owned subsidiary of Stanmore Resources Limited (Stanmore Resources), has agreed to acquire 100 per cent of the shares in Dampier Coal (Queensland) Pty Ltd from BHP Minerals Pty Ltd, the subsidiary which holds BHP’s interest in BMC, for cash consideration of up to US$1.35 billion. The purchase price comprises US$1.1 billion cash on completion, US$100 million in cash six months after completion and the potential for up to US$150 million in a price-linked earnout payable in the 2024 calendar year. Excluding the price-linked earnout, this represents an Enterprise Value/EBITDA multiple of 6.9x1. The sale is subject to the satisfaction of certain conditions, including customary competition and regulatory approvals. Foreign investment review board approval sought This includes approval from the Foreign Investment Review Board. Stanmore Resources has agreed to a break fee payable where certain conditions are not satisfied. Stanmore Resources would assume economic and operating control of BMC on completion of the sale, including its share of all current and future liabilities of BMC subject to certain limited exceptions. Completion is expected to occur in the middle of the 2022 calendar year. BHP to carry on operations for the time being BHP will continue to operate BMC until completion and work closely with Stanmore Resources to ensure a successful transition of ownership. BHP will provide certain transitional services to Stanmore Resources for a short period of time after completion. This transaction is consistent with BHP’s strategy, delivers value for our company and shareholders and provides certainty for BMC’s workforce and the local community said BHP’s President Minerals Australia Edgar Basto. “As the world decarbonises, BHP is sharpening its focus on producing higher quality metallurgical coal sought after by global steelmakers to help increase efficiency and lower emissions,” Mr Basto said. “South Walker Creek and Poitrel are well-run assets that have been an important part of our portfolio for many years and we are grateful for their contribution to BHP. Related: Stanmore wins environmental approval for new mine “Under this agreement, BMC will transition to Stanmore Resources, an ASX-listed company that has established relationships with Traditional Owners and strong engagement with their workforce and local communities. “Stanmore Resources share our focus on safety performance and culture and support Australia’s commitments under the Paris Agreement.” Golden Energy and Resources Limited, a Singapore Exchange listed company and Stanmore Resources’ major shareholder, guarantees Stanmore Resources’ obligations to pay the purchase price and any break fee obligations to BHP up to US$600 million.

Stanmore Resources raises funds to buy the ‘B’ in BMC

Industry Queensland

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