The consortium comprises manufacturing, investment and trading conglomerate Daewoo International Corporation and government-owned Korea Resources Corporation (Kores).

 

The companies will join current joint venture partners Whitehaven (77.5%), Electric Power Development (7.5%), EDF Trading (7.5%) and Upper Horn Investments Limited (7.5%).

 

The purchase price will be paid in three tranches with $32.5 million due on completion of the sale, $30 million by November 15 this year and $62.5 million by December 2010, subject to Narrabri stage two approval.

 

The costs agreed on as part of the heads of agreement cover 7.5% of all costs incurred by the joint venture since the start of this year.

 

As part of the deal, Whitehaven has agreed to sell Daewoo up to 1.5 million tonnes per annum of Korean specification coal. This annual tonnage is benchmarked to 25% of Narrabri’s annual production over the life of the mine and can be supplied by Whitehaven from any source.

 

The price of coal sold to Daewoo will be based on the published globalCOAL NEWC index with appropriate adjustments for calorific value.

 

“Their [Daewoo and Kores] presence in the joint venture will help mitigate market and counterparty risks and also provide significant strategic benefits to the company over the long term,” Whitehaven managing director Tony Haggarty said.

 

The deal is subject to the approval of the company’s boards and Australian and Korean regulatory approvals.

 

Construction of stage one of the Narrabri project, in NSW’s Gunnedah Basin, began in January 2008 and production is expected to start late this year.

 

Initial production using continuous miners will be 700,000tpa. A rail loop and associated coal handling and processing equipment has been constructed to export the coal out of Newcastle Port.

 

Stage two plans involve the production of an additional 5.3Mtpa from longwall mining. An environmental assessment is currently being carried out for the longwall phase.

 

The project will produce a low-ash, high-energy, low-sulfur thermal coal for the export market.

 

Whitehaven was trading at $2.95 this morning.