Under the deal, Cargill Coal will purchase 49% of all future coal from the mine and will take a 49% investment stake in the mine. Solid Energy will retain the majority shareholding of 51% and will continue to employ all the 140 staff and to operate the mine.
Solid Energy is currently developing a new area of the mine to access more than 3 million tonnes under a five-year plan.
Coal extraction is expected to restart in late 2007 with the current coal output of 7000 tonnes a month ramping up to 65,000 tonnes (800,000tpa) a month thereafter.
“When we made the commitment last year to go ahead with a new five-year plan at Spring Creek, it was backed up by letters of intent to purchase the output from potential new and existing customers. In converting those letters into sales contracts, Cargill expanded the discussion by offering to purchase equity in the mine to secure a long-term share of this high quality coal,” Solid Energy chief Barry Bragg said.
“We have a major capital investment program at the mine which needs to be funded. Cargill’s participation will help fund that and the joint venture company can now begin detailed planning of a subsequent 15-year plan for the Rapahoe sector of the mine, accessing an additional 15Mt of reserves.
“Provided we continue to meet our targets, this will give the mine a future which goes out 20 years, as opposed to the current five.”
Over the next three years, the joint venture will invest $NZ25 million in new equipment for the mine, including two new road headers and an upgrade of the coal washery to provide a low ash, low sulfur product for international thermal and steelmaking markets.
