Sino Construction to buy another coal firm

BUILDING construction and civil engineering company Sino Construction Group, continuing its mine-buying spree, yesterday announced it is acquiring all the coal assets owned by Australia- listed Guildford Coal Ltd for US$25 million plus additional royalty - a price revised upward from its initial offer after discussion with Guildford.

The coal assets, comprising thermal, pulverised coal injection and thermal coal, are said to have an indicated resource of 227 million tonnes, and an upper exploration target of 7.17 billion tonnes of coal.

On completion of the deal, the mainboard-listed firm will issue to Guildford a convertible promissory note, and has the option to redeem the note from Guildford if the volume-weighted average price of Sino shares two days before the maturity date is at least S$0.24. It can convert the principal sum of the notes into new ordinary shares, and allot and issue these to Guildford at S$0.20 a share. Sino will also pay Guildford a royalty of US$0.35 for each tonne of coal sold from the assets, for five years from the start of commercial production.