Polo Resources looks to exit Mongolian JV through sale to Winsway Coking Coal
Toronto and London listed energy junior, Polo Resources (TSX, AIM:POL) has inked a MOU (Memorandum of Understanding) to sell its 50% interest in a joint venture with Peabody Energy (NYSE:BTU) that covers a collection of uranium and coal interests in Mongolia.
The MOU envisages Winsway Coking Coal acquiring Polo’s stake in Peabody-Polo Resources B.V for US$35 million in cash, of which $20 million will be payable within 12 months of completing the transaction. Polo Resources will also retain a 1% royalty over coal sold from licences in the JV, capped at a maximum sum of US$50 million and maximum time line of 25 years.
"We are pleased to be executing the divestment of our non-core holding in the joint venture in Mongolia. Polo is focused on maximising shareholder value through its uranium and coal interests in Extract Resources Limited, GCM Resources plc and Caledon Resources plc and currently has approximately US$23 million in cash," Neil Herbert, Executive Co-Chairman, said.
Winsway Coking Coal is a China based group engaged in trading, distributing, processing, storing and transporting coal, chemicals and petroleum.
The primary asset held in the JV with Peabody Energy is the Erds Coal Project, which contains a JORC compliant indicated and inferred resource of 807 million tonnes of thermal coal.
The Erds project adjoins a tenement to the west owned by Gulfside Minerals which contains a NI 43-101 compliant resource of 1.185 billion tonnes of thermal coal at the Onjuul coal deposit.
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