May 2010
A Chinese steelmaker has signed a $700 million off take agreement for Northern Energy Corporation’s (NEC) coal with the Brisbane-based miner to offer the partner a seat on its board.
Xinyang Iron and Steel Group Company Limited agreed to invest $23 million in the Brisbane-based miner, which will give it a 12.7 per cent share of the company’s expanded capital base.
Xinyang will receive 65 per cent of mine output from the planned Colton mine and any additional developments in Maryborough.
NEC managing director Keith Barker says the alliance is a significant milestone for the Maryborough Hard Coking Coal Project.
“China represents an increasingly important market for coking coal and this off take agreement will underpin the market for Burrum hard coking coal which is to be produced from the Colton mine,” he says.
“The introduction of Xinyang as a substantial shareholder in NEC is expected to result in benefits to the company that are broader than the Maryborough marketing arrangement and which may include enhancing the prospect for development of the company’s other projects.
“The agreement with Xinyang provides us with the capital to take the next step in the development of Colton while retaining 100 per cent of the project as we fully evaluate the size of the Maryborough resource base and the potential for further mine expansion.”
HopgoodGanim advised on the deal and also on the placement of 16.315 million Northern Energy shares to Xinyang Group to raise $23 million.
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