Australian Stock Exchange listed Centennial Coal announced on July 4 it planned to buy Glencore Coal's 50% holding in the Springvale colliery in New South Wales.
Centennial will contribute about $88 million towards the cost of the acquisition, to be raised through a combination of project debt and equity finance.
"It will nearly double Centennial's current production to over 5 million tonnes per annum and increase expected cash flow to over $22 million in 2001," Centennial managing director, Bob Cameron, said.
"It will provide Centennial with a strong base on which to continue to build the company and create value for shareholders. Additionally, Centennial intends to maintain its policy of paying a high level of dividends to shareholders."
In June, as part of a consortium with SK Corp of Korea and Korean Resources Corp, Centennial bought Samsung's 50% interest in Springvale. Total purchase price for 100% of Springvale is about $114 million, with Centennial's share about $88 million.
"It is expected that this acquisition will have an immediate and positive impact on the outlook for Centennial [being immediately earnings per share positive] and provide future marketing and operational synergies with the group's existing western mines."
Springvale produced 2 million tonnes to December 1999, 1.6 mt of which is supplied under contract to the Mt Piper Power Station
Centennial's relative interest in the consortium, meant it would own about 77% of Springvale, which it would operate on behalf of the consortium. This will be the first time Centennial operates a longwall operation.
