Published On: February 13th, 2024
Stanmore Resources Limited (ASX: SMR), the renowned Australian company, recently stormed the stock market after announcing its latest achievement. The company is all set to acquire the stake for the Eagles Down Project associated with the mining company, South 32 ASX. For the unversed, this project’s worth is around $135 million at present times. So, Stanmore Resources Limited and South 32 Australia have agreed that the former will acquire a whopping 50% interest in the Eagle Downs Metallurgical Coal Joint Venture Project in Queensland. The remaining 50% is reportedly owned by the China Baowu Steel Group subsidiary Aquila Coal. It is a privately held resources company with substantial interests in the bulk iron ore and metallurgical coal commodities across different regions.
That is why Stanmore has also signed a term sheet with Aquila. This initiative from the company’s side has helped waive any pre-emptive rights associated with selling and transferring South32’s interests.
South 32 ASX News
According to the recently agreed terms under the agreement with South 32 ASX, Stanmore Resources will purchase the decided stake for A$206.5 million. This further includes some additional costs:
- Upfront cash payment: $15 million
- First 100,000 tonnes of mined coal: $20 million
- Capped royalty: $100 million
Furthermore, Stanmore will also be able to acquire an additional 30% interest in the Eagle Downs project from Aquila. This is usually based on the same commercial terms agreed upon under the same South32 ASX share price discussion and transaction. Not only that, but the company can also acquire an 80% interest in the Eagle Downs south tenement.
Marcelo Matos, the CEO of Stanmore Resources, thinks that acquiring the new project will help the company expand its footprint in the metallurgical coal basin in Queensland, a significant mining state in Australia.
Stanmore also considers Eagle Downs one of Australia’s last remaining undeveloped areas. It usually targets the premium Moranbah coal measures situated in the Bowen basin. The previous owners of the project have already underpinned a resource base of 1.14 billion tonnes and reserves worth 292 million tonnes.
South 32 ASX and Stanmore’s Comeback
Stanmore Resources had a rough time at the beginning of February, with its share price down by 5%. However, its latest achievement with South 32 has proved that stock prices are driven by a company’s financial performance over the long term, which looks quite promising in this case.
Stanmore won its fortune in Queensland’s Isaac Plains mine, paying Weil and Sumitomo just $1 for the property and its $32 million environmental assets.
Stanmore, backed by Indonesia’s Widjaja empire, subsequently bought BHP’s (ASX: BHP) Poitrel and South Walker Creek coalfields for up to US$1.35 billion by 2022.
The company’s acquisition of 50% interest through the high-quality Eagles Down project proves its strong comeback in the share market.
South 32 ASX and its Future
The South 32 share price Australia had decreased to 3% in December 2023 after the mining company delivered its update for the period ending, including its production numbers. The company also reported its FY24 first-half operating unit costs are expected to be “in line or below” FY24 guidance for its primary operations.
The company also announced extending its alliance with another partner, AusQuest, in November 2023. The collaboration focused on opportunities in Australia for lead, zinc, copper, and nickel.
Only time will tell whether the new agreement of South 32 ASX with Stanmore Resources Limited will prove fruitful for the mining company and its stocks in the future.
