Xstrata‘s (XTA-L) subsidiary Xstrata Coal has struck a deal to buy Cline Mining‘s (CMK-T) wholly owned Lossan coal deposit in B.C.’s Peace River coalfield for $40 million in cash.
The deal is expected to close next Wednesday.
The Lossan property covers 38 sq. km and and hosts a metallurgical coal resource of 240 million tonnes, of which 186 million tonnes are in the measured and indicated categories.
The property is surrounded by a group of licences that Xstrata Coal owns through its acquisition of First Coal in August, bringing Xstrata’s total holdings in the area to almost 1,000 sq. km.
In a release, Cline Mining’s president and CEO Ken Bates said the sale provides the company with “immediately available funds to ensure efficient ramp-up and expansion of its New Elk metallurgical coal mine and the ability to avail itself of other strategic opportunities.”
Cline’s reopened New Elk underground coal mine is in Trinidad, Colo., and boasts measured and indicated metallurgical coal resources of 388.5 million tons (352 million tonnes). The mine was first opened in 1951 and operations of some sort continued at the site until 1996, even after actual mining ceased in 1989.
Cline Mining produced its first coal at New Elk last December, and expects to ramp up to 2.75 million tons (2.5 million tonnes) of saleable metallurgical coal produced in 2012, with 3 million tons of coal produced in 2013 and thereafter.
Cline also has an iron ore project in Madagascar and its Cline Lake gold mine property in northern Ontario.
Based in Sydney, Australia, Xstrata Coal has interests in over 30 operating coking and thermal coal mines in Australia, South Africa and Colombia. In Canada, the company is advancing its First Coal-Lossan project in B.C. and its Donkin coal project in Nova Scotia.
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