Mining and Heavy Industries

Rio sells Mt Pleasant to US firm

Coal. Photo: Shutterstock.

Rio Tinto has sold its Mount Pleasant thermal coal mine to US-based MACH Energy for almost $320m.

Rio this morning announced the sale, worth US$224m (AU$318m) plus royalties. The deal includes a payment on completion of US$83m, two unconditional deferred payments of US$58m each payable 8 and 16 months from completion, a conditional payment of US$25 million, and royalties, payable quarterly at 2% of gross FOB revenue for coal sold from the first 625mt of RoM coal when prices exceed $72.50 a tonne.

Coupled with the September announcement of the US$606m sale of its interest in the neighbouring Bengalla coal joint venture to New Hope Corporation, Rio has now made roughly AU$1.18bn in coal asset sales in just under six months, and more than AU$5bn in divestments since January 2013.

Rio Tinto Copper & Coal chief executive Jean-Sébastien Jacques said the news was good for the company’s shareholders.

“These agreements for over US$800 million in asset sales deliver significant value for our shareholders, with the potential for future royalties from Mount Pleasant,” Jacques said.

“We believe Mount Pleasant can have a very positive future under its new owners with different priorities for development and capital allocation.”

Mount Pleasant is a large-scale, thermal coal asset in the Hunter Valley of New South Wales with total marketable reserves of 474mt.

The sale is subject to certain conditions precedent being met, including completion of the restructure of Coal & Allied and regulatory approvals, and is expected to close in the second quarter of 2016, Rio concluded.

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