On Thursday 23 December 2010, 9:39
White Energy Company Ltd is to proceed with a $500 million acquisition of Cascade Coal Pty Ltd, the owner of the Mt Penny Coal Project in the central west of NSW.
White Energy said on Thursday it would exercise its option to acquire Cascade in a cash and scrip deal worth $486 million, plus assumed liabilities worth $14 million.
White Energy shares will be issued to Cascade shareholders for the lower of $3.85 or the 15-day trading day volume-weighted average price.
The minimum price of the share transaction has been set at $3.50, which compares with White Energy's last traded price of $3.40.
The deal remains subject to regulatory and White Energy shareholder approval.
Finalisation of the acquisition is expected by January 31, before White Energy shareholders vote on the transaction, probably in March.
Cascade's Mt Penny coal project is located 60 kilometres north-east of Mudgee, and is linked to the Newcastle port by a 235 kilometre rail line.
"The proposed acquisition of Casade represents a unique opportunity for White Energy to own a high quality thermal coal asset, with significant reserves and good accessibility to transport infrastructure, located in the well established coal fields of New South Wales," White Energy said in a statement.
Of the 173.7 million tonnes of coal resource at Mt Penny, 102.6 million tonnes have been classified as probable reserves.
It is expected to produce up to 3.8 million tonnes of export quality coal per annum, with first production expected in 2013.
By 2018 annual production is expected to reach 6.5 million tonnes.
White Energy said a maximum of $41 million worth of the transaction will be paid in cash.
The transaction will be funded completely out of current cash reserves, and there is no prospect of raising capital, White Energy said.