New Age Exploration (NAE), an Australian metals exploration and development company, has announced the sale of its Lochinvar coking coal project in the UK to Paladar Trading.
The binding share sale agreement stipulates the sale of the Lochinvar asset for A$1 in cash.
Additionally, NAE will receive a royalty of A$1 per tonne (t) on the first 15 million tonnes (mt) of minerals, ores or concentrates produced from the project's licences.
This divestment aligns with NAE's strategy to concentrate on its gold and lithium projects in Western Australia's central Pilbara region as well as New Zealand.
The Lochinvar project encompasses three contiguous exploration and conditional underground mining licences – Lochinvar, Lochinvar North and Lochinvar South.
NAE has held full ownership of these licences.
Historical exploration at the site began in the 1950s by the National Coal Board, which drilled four initial boreholes.
Early work confirmed the presence of thick coal sequences within the Middle Coal Measures, previously mined at the nearby Rowanburn colliery, particularly within the Lochinvar North licence.
In October 2014, NAE concluded a scoping study for the Lochinvar project, which demonstrated the viability of a cost-effective, long-life 1.9mt per annum longwall mining operation.
The study projected an annual output of 1.4mt of coking coal, targeting the UK and European markets.
In March 2017, the scoping study was revised, presenting a strong economic case with a post-tax net present value at a 9% discount rate of $410m, an internal rate of return of 27% and a payback period of four years.
NAE executive director Joshua Wellisch said: “We are pleased to announce the sale of Lochinvar Coal Limited, a strategic move that positions NAE to potentially earn up to A$15m in royalties from future coal production at the project, subject to the successful development of the project by Paladar.
“This transaction enables us to focus on advancing our promising gold and lithium projects in central Pilbara, Western Australia and New Zealand. This is where we see significant growth opportunities and value creation potential.”
