Stanmore Coal has another suitor
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Private Queensland coal miner Winfield Energy is interested in acquiring Stanmore Coal (ASX:SMR).
Stanmore most recently had been fighting off Indonesian company Golden Investments.
Winfield owns the Rolleston Coal mine – which is Australia’s second largest thermal coal mine; and has financed the Wiggins Island coal terminal. Now it wants a piece of Stanmore.
Winfield managing director John Canavan sent a letter to Stanmore today expressing admiration for the fellow coal miner.
“Winfield Energy is interested in Stanmore, its business interests, and assets, as they are complimentary to the existing business interests held by Winfield Energy,” he said.
Winfield had undertaken a preliminary analysis of its asset and wants to open up a dialogue about making a formal offer.
Any such offer would be between $1.50 and $1.70 per share. It admitted it would need debt finance to fulfil the offer and more technical and legal due diligence would be required.
It had not considered the fate of Stanmore’s current management team. It concluded with a request that “Stanmore’s board consider this proposal and indicate their willingness or not to open a dialog with Winfield Energy on the basis set forth in this document”.
Stanmore announced it had received the proposal this afternoon and it had engaged with Winfield to finalise a process deed which will take this further.
It appointed its own corporate and legal advisers but indicated there was no guarantee this would eventuate.
But chairman Stewart Butel confirmed, “the board has engaged with Winfield Energy with a view to entering into a process deed and ultimately, to facilitate a formal offer for the consideration of shareholders.”
Stanmore also mines coal in central Queensland. It produced a record amount of coal last quarter – 721,000 tonnes (annualised is 2.9 million tonnes) of which 688,000 tonnes was sold. It anticipates earnings between $154 and $156m.
It has been helped by high coal prices, having secured $US124/t for its Q1 2020 contracts.
Wilsons analyst Daniel Porter said last month, “this company is a case study in careful mine management, efficiency of operations and thoughtful forward planning.”
The news sent Stanmore’s shares up nearly 20 per cent to $1.49 on Wednesday afternoon.