Thungela to buy controlling stake in Australian coal mine
By Michele Maatouk
Date: Friday 03 Feb 2023
(Sharecast News) - Thungela Resources said on Friday that it has agreed to buy a controlling stake in the Ensham coal mine in Australia to diversify its geographic reach.
Thungela, which was spun off from Anglo American, will buy an 85% interest in the Ensham mine through a new company, Sungela Holdings. The acquisition is being made with Audley Energy and Mayfair and the interest in the coal mine will be bought from Idemitsu.
The Ensham coal mine is the primary asset of the Ensham Joint Venture, and comprises several tenements located within the southern Bowen Basin in Queensland. It is currently 85% owned by Idemitsu, with the remaining 15% owned by LXI.
Initially established as an open cut mine, the Ensham coal mine has been an underground operation since 2012. The Ensham coal mine produced approximately 3.2 Mt of high-quality, low-ash and low-sulphur thermal coal in 2022, and has the potential for increased production in the future.
Thungela said the deal delivers on its strategy "to pursue geographic diversification, and is in a commodity we understand well and in which we can leverage our core skills".
The acquisition is expected to be earnings and cash flow accretive, with "strong potential" for a short payback period, Thungela said. It noted that around two thirds of the mine's 2023 budgeted production has been forward sold at "attractive" prices.
The transaction comprises an AUD267m subscription by Thungela for an initial 75% shareholding in Sungela Holdings, and a mezzanine loan of AUD68m from Thungela to co-investors Audley and Mayfair.
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