BHP sells 80% stake in BHP Mitsui Coal for $1.35 billion

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BHP announced it has signed a Share Sale and Purchase Agreement to divest its 80 percent interest in BHP Mitsui Coal (BMC), an operated metallurgical coal joint venture in Queensland.

Stanmore SMC Holdings, a subsidiary of Stanmore Resources), has agreed to acquire 100 per cent of the shares in Dampier Coal (Queensland) from BHP Minerals, the subsidiary which holds BHP’s interest in BMC, for cash consideration of up to US$1.35 billion.

The purchase price comprises US$1.1 billion cash on completion, US$100 million in cash six months after completion and the potential for up to US$150 million in a price-linked earnout payable in the 2024 calendar year. Excluding the price-linked earnout, this represents an Enterprise Value/EBITDA multiple of 6.9×1.

Stanmore Resources would assume economic and operating control of BMC on completion of the sale, including its share of all liabilities of BMC subject to certain limited exceptions. Completion is expected to occur in the middle of the 2022 calendar year.

BHP will continue to operate BMC until completion and work closely with Stanmore Resources to ensure a successful transition of ownership.

BHP’s President Minerals Australia Edgar Basto said: “This transaction is consistent with BHP’s strategy, delivers value for our company and shareholders and provides certainty for BMC’s workforce and the local community.”

Golden Energy and Resources, a Singapore Exchange listed company and Stanmore Resources’ major shareholder, guarantees Stanmore Resources’ obligations to pay the purchase price and any break fee obligations to BHP up to US$600 million.

The review process for New South Wales Energy Coal is progressing, in line with the two-year timeframe announced in August 2020. BHP remains open to all options and continues consultation with relevant stakeholders.