Under the agreement between Fortune and Posco Klappan Coal subsidiary Posco Canada (Poscan), Fortune will own 80% of the project while Poscan will hold 20%.
Fortune will provide local development and operations expertise and Poscan will bring market knowledge and financial backing.
Poscan will put forth $C181 million in capital for Mount Klappan, including $30 million in upfront funding – $20 million of which will fund the JV – and 20% of total development and capital costs, estimated to be $154 million.
It will also provide $17.2 million in additional payments to Fortune as project milestones are met.
Poscan will receive 20% of the produced product.
"This transaction expands our presence in North America, which already includes investments in the Mount Hope Molybdenum Project and Elk Valley Coal," Poscan president Yong Keun Kim said.
Fortune president and chief executive officer Robin Goad added: “This transaction will allow for accelerated development of the project and is anticipated to provide 100% of required funding to complete more detailed engineering and design studies as well as permitting and stakeholder consultations.”
Fortune, which purchased the deposit in 2002, has estimated it will take $768 million to get the mine into full production, including $317.8 million for a 150 kilometre CN Rail railroad connection and upgrade for shipments to the Prince Rupert deep water port.
The Mount Klappan metallurgical coal project, made up of 15,886 hectares of exploration licenses in northwest British Columbia, contains speculative resources of 2.2Bt and measured resources of 107.9Mt.
A study completed by Marston and Marston in 2010 based its findings on an open pit mine and wash plant producing 3Mt of pulverized coal injection coal per year for the international steel industry, with the ability to diversify production into other metallurgical coal products.
