Bathurst to pay $600,000 for Canterbury Coal assets, agrees to 3-year supply contract
Bathurst Resources, the Wellington-based miner, will pay as much as $600,000 for the assets of Canterbury Coal near Christchurch to expand its New Zealand business.
The mining company has been operating the open cast mine near Coalgate as part of due diligence and during this time has won a three-year contract to supply up to 55,000 tonnes of coal a year to a local dairy processing plant, it said in a statement.
The mine will initially produce up to 50,000 tonnes a year and is forecast to increase that to 100,000 tonnes over the next few years to meet dairy and industrial demand in the Canterbury region, Bathurst said. The mine produces thermal coal which is low in sulphur and ash and is in high demand by the local dairy and food processing industries, the company said.
"This acquisition and new supply contract further underpin the growth of our domestic sales," Bathurst managing director Hamish Bohannan said. "Coal demand in the Canterbury area is set to grow to over 150,000 tonnes per annum in the short term. The proximity of the mine to these markets gives us a distinct freight advantage over our competitors to target this growth potential."
Recent drilling at Canterbury Coal has identified a coal resource of 3.3 million tonnes, Bathurst said.
To support Canterbury Coal, Bathurst is in talks to take a half stake in the Kenroll Coal Yard in Rolleston, which it would rename Bathurst Industrial Coal. This would provide a consented coal yard, plant and equipment, weighbridge and screening facilities, the company said.
The purchase of Canterbury Coal's assets is conditional on several consents. Payment is for an initial $450,000 and a further $150,000 a year after settlement, the company said.
Canterbury Coal is owned Akaroa-based by Ken Shearer and Jennifer Jane Shearer, according to Company Office records.
Bathurst's shares were unchanged at 21 cents yesterday, and have gained 11 percent this year.