NuCoal Resources Ltd. (NCR), an Australian coal developer, is in talks to sell at least a 10 percent stake in a A$650 million ($694 million) thermal coal project at Doyles Creek in New South Wales state.
“We’re fairly advanced now and we’re talking to three,” Glen Lewis, managing director of the Newcastle-based company, said today in an interview. “By the third quarter I’d like to see this over and done with because it would give us that bit more certainty.”
NuCoal, which is rated “buy” by four brokers, plans to start shipping as much as 5 million metric tons of thermal coal starting in 2015 from its Doyles Creek project, which has a resource of 247.1 million tons, according to a presentation on its website. Coal companies in Australia, the biggest exporter of the fuel, are boosting production to meet increasing electricity demand in Asia.
“It’ll be an end-user or a significant trader in the Asian market,” said Lewis, who previously managed six of Xstrata Plc (XTA)’s underground coal mines in New South Wales. “We may sell a second tranche in the project down the track.”
NuCoal was down 4.7 percent at 30.5 cents at 1:01 p.m. in Sydney. The stock has fallen 42 percent over the past year.
Doyles Creek will ship coal through the port of Newcastle. The New South Wales government is conducting an inquiry to investigate the allocation of an exploration license to Doyles Creek Mining Pty in 2008. The license was later sold to NuCoal.
“We purchased the license in good faith and we went through a full due diligence process to purchase it, so we are confident we have full legal tenure,” Lewis said, who expects the probe to conclude in June.
To contact the reporter on this story: Elisabeth Behrmann in Sydney at firstname.lastname@example.org
To contact the editor responsible for this story: Rebecca Keenan at email@example.com