Kuro Coal, a wholly owned subsidiary of Atrum Coal, has agreed to acquire up to a 70% interest in the Elan project, located close to major raw materials producer Teck’s mining operations.
In the filing on Wedsnesday September 3, Kuro said the acquisition would take place through a joint venture between itself and Elan, with parent company Atrum retaining the Panorama anthracite project that Kuro announced it planned to develop in May.
Kuro is set to spin off from Atrum in an initial public offering. Atrum and Kuro ceo Gino D’Anna said that the Elan acquisition fit Kuro’s metallurgical coal strategy.
“Atrum is solely focused on taking its... Groundhog anthracite project to production, so Kuro can provide Atrum’s shareholders with exposure to an exciting exploration venture as well as commodity and jurisdictional diversification,” D’Anna said.
As part of the deal, Kuro will invest C$500,000 ($459,000) towards Elan’s 2014 exploration project, and will potentially spend a further C$4 million ($3.67 million) to take a 60% stake in the project.
According to the agreement, Kuro can increase its share in Elan by completing a bankable feasibility study.
The agreement comes amid a depressed seaborne coking coal market.
Steel First’s premium hard coking coal index cfr Jingtang was calculated at $122.39 per tonne on September 8, and has remained rangebound at low levels of $119-123 for the past six months.
This compares with prices close to $160 per tonne 10 months ago.