Blair Athol to be sold - we think.
SHAREHOLDERS approve complicated sale we can’t understand.
Wednesday 20 May 2015
LINC Energy says it received shareholder approval last week, for the sale of its coal business New Emerald Coal (NEC) to United Mining Group.
Nothing much is known about the United Mining Group, other than there is speculation it will be the official new owner of NEC, possibly as early as this week.
However, Linc’s entry and now apparent exit from the coal sector remains far from straightforward.
In 2013, Linc Energy set up a subsidiary called New Emerald Coal (NEC) to house all its coal assets, and on the face of it, the Blair Athol mine was the jewel in the crown.
Not only is Blair Athol the only asset Linc or NEC appear to own that has a highly understood measured coal deposit, it is in care and maintenance which means a return to production is relatively quick and easy.
However in reality, it may not be an asset owned by Linc or NEC - with Shift Miner understanding that purchase negotiations with its former owners the Blair Athol Joint Venture (BAJV) still not finalised more than 12 months after the deal was announced.
So in fact, the sale approved this week by shareholders is actually of the ‘agreement to acquire’ Blair Athol coal mine - not the mine itself - and it remains unclear what happens to the deal with UMG if - for whatever reason - an “agreement to acquire” is not reached between NEC and BAJV.
In response to queries by Shift Miner two months ago, a spokesperson for Linc said they had “no reason to expect that the agreement to acquire Blair Athol would not be completed by NEC”.
However, the on-sale to UMG does allow for such an eventuality
“New Emerald Coal, under control of United Mining Group expects to complete its acquisition of the Blair Athol coal mine from the BAJV in the coming weeks and subsequently will re-commence operations on site,” Linc said two months ago.
“Under the revenue sharing agreement, Linc receives an indexed US$0.50 per product tonne of coal sold from the Blair Athol Project, if the Blair Athol acquisition completes.”
Assuming all those negotiations go to plan, the future for Blair Athol still remains uncertain with very few details available about the track record of the theoretical new owners UMG.
An online search of UMG and its Managing Director Gary Williams reveals that the United Mining Group entity was formed in late December 2014 and that Gary Williams was an executive Director of South East Asia Resources, which in January was put in administration.
However, despite that, Mr Williams says he plans to convert Linc’s assets into a functioning coal mining business.
“The acquisition of Linc Energy’s conventional coal assets will provide a platform on which United Mining Group plans to build a substantial Australian coal portfolio over the coming years,” Mr Williams said in February.
“ United intends to follow on from the good work started by NEC in its preparations for their commencement of operations at Blair Athol and plans to continue with development of Teresa as its next mine into production.
“United is continuing with its aggressive growth plans and is looking for additional synergistic acquisitions over the coming months.”