Bloomberg News

Carabella May Sell Part of Coal Project to Fund Development

December 15, 2011

(Updates with closing share price in fourth paragraph.)

Dec. 15 (Bloomberg) -- Carabella Resources Ltd., an Australian coal developer, may sell a stake in its most advanced coal project in Queensland state to help fund development that’s estimated to cost as much as A$1 billion ($989 million).

“We will consider various funding strategies, one is to potentially bring in a partner at a minority level into the project,” Anthony Quin, managing director of the Newstead, Queensland-based company, said in a phone interview. “We’ll consider funding as we get into the feasibility study.”

Global coal takeovers have surged to a record $38.1 billion this year as China and India secure assets to meet demand from their steelmakers. The Grosvenor West coking coal project in the Bowen Basin may cost between A$800 million and A$1 billion to develop, according to Helmsec Global Securities Pty.

Carabella fell 5.5 percent to A$1.20 at the close of Sydney trading. The stock has gained 6.7 percent this year, after listing in late 2011, compared with a 13 percent drop in the benchmark S&P/ASX 200 Index.

Data Room

The company said in October that it had received “several unsolicited expressions of interest” in Grosvenor West and had set up a data room for some interested groups. Carabella aims to begin a study on the project in January, which is expected to take until the end of 2013.

“From the parties in the data room there has been no proposal,” Quin said. “I’m not suggesting there will be a proposal, we’ll have to see what comes.”

BHP Billiton Mitsubishi Alliance and Peabody Energy Corp. were among a number of parties studying the company’s books, the Australian Financial Review said Oct. 17, without citing anyone.

Grosvenor West is located within 5 kilometers (3.1 miles) of an existing rail line. Carabella is part of a group that won the right to negotiate building part of the expansion of the Abbot Point Coal Terminal to secure 2 million metric tons of port capacity.

Carabella is in talks to secure more port capacity at Abbot Point and is exploring shipping from the Dudgeon Point Port development, Quin said. Dudgeon Point is a A$10 billion port project being built by India’s Adani Enterprises Ltd. and Brookfield Infrastructure Group, set to start construction in 2013.

--Editors: Keith Gosman, Rebecca Keenan

To contact the reporter on this story: Elisabeth Behrmann in Sydney at ebehrmann1@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net


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