The GVK group has entered into an agreement with Hancock Prospecting Pty Limited and certain of its affiliated entities (Hancock Group) to acquire a strategic part of a large,high-quality coal mine and infrastructure development project in Queensland,Australia. The deal is pegged at $1.26 billion to be paid in a phased manner to Hancock Group with $500 million payable now at closing. From the balance,$200 million will be paid one year from closing and $560 million will be paid on financial close of the project (expected in 2012) but no later than three years from closing. GVK Coal Developers (Singapore),a subsidiary of GVK Natural Resources in joint venture with GVK Power and Infrastructure has entered into various acquisition documents with Hancock Prospecting Pty Limited and certain of its affiliated entities to acquire a shareholding up to 79 per cent in the Alpha and Alpha West Coal Projects located in the Galilee Basin in Queensland. Hancock Group will retain the remainder of the shareholding,100 per cent in the Kevins Corner Coal Project,located next to Alpha Coal Project and 100 per cent in the rail and port project connecting the two projects to the port of Abbot Point and Abbot Point T3 expansion project,while retaining some tonnage capacity for Hancock Group. These projects are together one of the largest integrated coal development projects in the world. The coal project consists of a 7.9 billion tonnes compliant with Australias Joint Ore Reserves Committee resource categorisation,with 3.3 billion tonnes reserves in measured and indicated categories and with potential for more tonnage. The infrastructure project involves the development,ownership and operation of an integrated infrastructure development consisting of a 495 km rail line and a 60 million tonnes per annum port at Abbot Point. At full production,the three coal projects are together expected to supply about 84 million tonnes per annum to the global sea-borne coal market. The first phase of production,expected to start in 2014,envisages a total production of over 30 million tonnes per annum of thermal coal. The total investment in the first phase is estimated to be around $10 billion,including capital expenditure on mines,rail line and port. Most of the coal from the project is intended to be delivered to Asia. GVK Energy is expected to enter into a long-term coal supply contract for up to 20 million tonnes per annum. GVK Chairman GVK Reddy said,We are extremely excited about closing this transaction and working with Mrs Gina Rinehart on bringing these projects to fruition. These are truly world-class coal assets and we look forward to the opportunity of jointly developing these projects to their full potential. Georgina Hope Rinehart,Chairman,Hancock Group said,We are delighted that this project will be,to the best of our knowledge,the largest project to date to be undertaken by Australian and Indian companies.
