Riversdale Mining sells 40% stake in Zambese Coal Project to Wuhan Iron and Steel Corp

24/06/2010 10:40:00

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Aussie coal miner Riversdale Mining Ltd (ASX:RIV) has agreed to sell a 40% stake in its Zambeze Coal project in Mozambique to China’s Wuhan Iron and Steel Corporation for US$800 million. As part of the agreement the Chinese company will also hold an 8% stake in Riversdale Mining. Riversdale has also signed a logistics partnership agreement with China Communications Construction Company. The Aussie miner says once completed the transaction values the undeveloped Zambeze Coal project in Africa, at US$2 billion. The payment of US$800 million is subject to the achievement of certain milestones, says Riversdale including the successful completion of a feasibility study and the granting of a mining contract, mining licence, final environmental approval and other necessary regulatory approvals required to proceed with development of the project. In the event that these milestones are not achieved, the consideration paid to date will be refunded to Wuhan. The signing of a memorandum of understanding between Wuhan and Riversdale also covers a comprehensive study of mine-to-ship logistics to enable the export of large tonnages of coal products from the Zambeze Coal Project to ports for export markets. Wuhan Iron and Steel will also help Riversdale in securing funding from Chinese financial institutions for development of the project. Riversdale Mining booked a profit in the 2009 financial year, although way down on its result the year before.