Bathurst Resources is looking to raise $31.9 million towards its share of joint venture Phoenix Coal with Talley's group after the pair agreed to buy three Solid Energy coal mines for a total $46 million.
ASX-listed Bathurst came off a trading halt yesterday about noon, confirming the mine sale price and capital structures for its share of the mines: Stockton on the South Island's West Coast and, in the North Island, Rotowaro and Maramarua, both near the Huntly power station.
Bathurst estimates its annual 400,000-500,000-tonne production rates could leap beyond 2 million tonnes by 2018 when its South Island assets are combined with the three former Solid Energy mines.
There is also an agreement that if international coking coal prices rise above $US150 a tonne during the next four years, Solid Energy could earn another $50 million in payments from Phoenix.
Bathurst shares were down almost 12% after the announcement, trading at A6c.
Solid Energy was placed in administration in August last year, burdened by almost $400 million debt and a previous 2012 trading loss of $40 million.
Bathurst Resources entered New Zealand around 2008, raised $242 million and listed, and began developing its Denniston plateau mines, near Westport.
However, subsequent court appeals against its consents delayed the project by two years, then export coking coal prices plunged and exporting did not start, so that the company relied solely on domestic South Island thermal coal production to provide some revenue.
Bathurst suspended operations on the Denniston plateau in March. Cash flow came from about 400,000 tonnes of domestic coal from its Takitimu mine in Southland and another inland from Christchurch.
Motueka-based family company Talley's, established in 1936, has four divisions - fishing and seafood, frozen vegetables, meat and dairy - and its 35% Phoenix share will contribute $14 million towards the mine acquisitions.
Bathurst holds a 65% stake and Tally's 35%.
Bathurst's market update yesterday showed its commitment was $NZ31.9 million, of up to $A12 million redeemable convertible preference shares, $NZ8 million convertible notes and up to $NZ11.9 million bonds.
Of the $31.9 million, $26 million was its equity contribution to Phoenix, plus $3 million for transition costs and $2.9 million in transaction costs.
With Talley's contributing $14 million, Bathurst $26 million and a BNZ debt facility of $15 million, from that $55 million Phoenix would pay $46 million for the three assets and have $9 million for working capital and bonds.
Bathurst outlined several future ''risk factors'', including that it might require additional capital and if that was not obtainable, it could adversely affect its operations.
The Crown has essentially rolled over the environmental indemnity funding, previously available only to Solid Energy, to Phoenix Coal if site rehabilitation is required.
The indemnities are $48.8 million at Stockton, $13.2 million at Rotowaro and $3.3 million at Maramarua, with the respective local bodies capping any environmental claims at the indemnity levels.
Bathurst's ASX update yesterday said the rationale and benefits of having the Stockton resource included use of its processing infrastructure for Denniston plateau coal, entry into the export coal market, and exposure to North Island domestic coal markets.
Separately, but also announced on Monday, Birchfield Coal Mines agreed to buy the Strongman and Liverpool open-cast mines near Greymouth, while Dunedin company Palmer MH Group, owned by Hunter brothers Craig and Tony, has bought the Ohai and New Vale mines in Southland, along with McMahon Investments.
Craig Hunter has directorships with numerous companies, including Blackhead Quarries and Palmers Mechanical. Neither of the brothers has returned calls.
Solid Energy's website said the New Vale open-cast mine, located on the Waimumu lignite coal field in Eastern Southland, produced about 250,000 tonnes a year, supplying local industry, including Fonterra's nearby Edendale dairy factory.
It had two working pits separated by about a kilometre but working the same lignite coal seam, together producing about 310,000 tonnes a year and employing more than 40 people.
Solid Energy acquired the privately-owned mine from the Highsted family in 2006.
The Ohai coalfield is about 80km northwest of Invercargill. Solid Energy closed it in June 2009, but resumed domestic coal production there in 2011 after finding about 50,000 tonnes of recoverable coal during rehabilitation work.
