South32 (ASX:S32) has satisfied all conditions for the Illawarra Metallurgical Coal sale to an entity owned by Singapore-based Golden Energy and Resources and Brisbane-based M Resources.
The conditions include securing regulatory approvals, Foreign Investment Review Board (FIRB) approvals, and the waiver or non-exercise of pre-emption rights held by BlueScope Steel.
South32, which has a market capitalisation of $13.49 billion, says the transaction is unconditional and is expected to be completed on or around 2 September 2024.
CEO Graham Kerr says the sale is a milestone in the transformation of the company’s portfolio towards commodities critical to a low-carbon future.
“The transaction will simplify our business, strengthen our balance sheet and reduce our capital intensity, unlocking capital to invest in our high-quality development projects in copper and zinc,” Kerr says.
“Looking forward, our strategy and disciplined approach to capital allocation is unchanged. We remain focused on delivering our development projects and advancing our portfolio of earlier stage options to further increase our exposure to commodities critical to a low-carbon future.”
Golden Energy and Resources and M Resources will assume economic and operating control of Illawarra Metallurgical Coal on completion, including all current and future liabilities.
Once completed, South32 will receive an upfront cash consideration of US$1.050 billion ($1.6 billion).
The deferred cash consideration of US$250 million is payable in 2030 and the contingent price-linked cash consideration of up to US$350 million, will be recognised in the company’s financial statement as a non-current other receivable and a non-current other financial asset, respectively.
The total consideration for the sale represents a multiple of 7.2 times average annual free cash flow for Illawarra Metallurgical Coal.
Formerly listed on the Singapore Exchange (SGX), Golden Energy and Resources is an investment vehicle focused on resources in the Asia Pacific region.
M Resources is an investment and marketing firm, which holds a global market presence and offices in Australia, China, India, Singapore, the UK, the US, and Latin America.
South32 is a globally diversified mining and metals company, headquartered in Perth, Western Australia.
Write to Aaliyah Rogan at Mining.com.au
Images: South32
