Falls Mountain owns the Willow Creek coal wash plant and coal properties in northwest British Columbia, which are near to the Brule assets of Cambrian’s associated company Western Canadian Coal.
The deal was worth some £7.3 million (CND$15.6 million), in cash plus the £5.1 million (CND$11 million) of Western Canadian Debentures held by Cambrian, with the agreement including a royalty payment on coal produced from Falls Mountain.
This deal increases production at Falls Mountain and Western Canadian’s existing assets to more than 5 million tonnes a year of hard coking coal and ultra low vol PCI coal from 3.4 million by late 2009.
Cambrian has agreed to sell these assets to Western Canadian to complement its existing coal assets in British Columbia when it is in a position to complete the purchase. Until this time, Western Canadian will operate Falls Mountain on behalf of Cambrian.
Cambrian’s chief executive, Mark Burridge, said he and his fellow directors are pleased to have completed this deal.
“The opportunities this creates in British Columbia are extensive in terms of cost savings and increasing the life of mine operations over the combined assets of Western Canadian and Falls Mountain,” he added. “The company continues to actively support its various interests, in this instance coal, and looks to maximise shareholder value by building on existing assets and production levels.”
Western Canadian received legal services from Lawson Lundell, while its strategic and financial adviser was Hatch Corporate Finance, led by Rodney Bryant.
Hatch helped value Falls Mountain and led the negotiations with the counterparty including the final consideration, which was a mixture of cash, debentures, and a royalty on coal loaded at the Falls Mountain wash plant.
Cambrian Mining was advised by London law firm Trowers & Hamlins, while it received Canadian legal advice from Michael Partridge at Goodmans.
Trowers & Hamlins’ team was led by partner Richard Hildebrand, who said: “We are delighted to be acting for our long-standing client on another stage in the development of its coal assets in North America.”