Bathurst Resources Ltd. entered into an agreement to purchase the assets of the Tenas Coking Coal Project, comprising the Telkwa Metallurgical Coal Complex from Telkwa Coal Ltd., a subsidiary of Allegiance Coal Ltd., which is currently in liquidation. The Tenas Project is located in northwest British Columbia, Canada, 375 km by rail to Trigon Pacific Terminals Ltd. (formally known as Ridley Island).
The Tenas project could be a long-life (15 years) open-pit mine with a low strip ratio. It is located in a Tier 1 mining district, and it would align with Bathurst’s business model. Bathurst mines coal in New Zealand and exports it to customers in Asia.
“Operationally, Bathurst has a lot to bring to the Tenas Coking Coal Project,” said Bathurst CEO Richard Tacon. “In New Zealand, we have successfully managed and developed coal projects, drawing on the local community for our workforce and the provision of a range of services, while servicing industrial clients domestically and in overseas markets. Bathurst also has significant experience working alongside Indigenous Peoples, which remains a priority for us at all of our projects.”
The environmental approval for the Tenas Project is forecast to be granted in early 2025. The coal produced from Canada will complement the export coal products that Bathurst already sells from New Zealand into steel production in Japan, South Korea, China and India. Once developed, the Tenas Project would likely be one of the lowest-cost producers of metallurgical coal on the global seaborne market.
Bathurst will make an upfront payment of $2.33 million at closing, and another initial payment of $1 million in 45 days after closing. It will follow up with deferred payments of $4 million upon receiving all operational and environmental permits to develop, construct and operate the Tenas Project mine, and another $3 million on the first anniversary of receiving all final permits.
The company will also pay a capped royalty of up to $3 million payable at the rate of $2/mt on coal sales from the Tenas Project, where the sales price (excluding taxes) is above $200/mt (FOB) from the Tenas Project, over the first three years after the commencement of commercial production.
