The company's stock is up 44% in early trade.
During the two-day halt, coal prices have abruptly spiked 40% from US$300 a tonne to US$420 a tonne amid concerns about Russian supply.
Stanmore shares are now absorbing both the transformational acquisition and surging coal prices.
Stanmore is on track to become one of the largest global producers of metallurgical coal, jumping from 2m tonnes of production in FY21, to a forecasted 5.9m to 6.5m in the first-half of calendar year 2022.
Highlights the acquisition include:
Mitsui Coal consists of four mines and three wash-plants within a 50km radius
Two operational mines which produced approximately 8.8m tonnes of coal in FY21
Purchase price for the transaction comprises:
US$1,100m payable on completion
US$100m payable six months post completion
Up to US$150m based on revenue sharing mechanism
Transaction expected to be complete in the second quarter of 2022
To fund the acquisition, Stanmore successfully raised $656m at an offer price of $1.10 per share. This represents a 12% discount to the stock's last close price of $1.25.
Stanmore said that the market outlook for met coal remains strong, buoyed by factors including:
Production shortfalls in India and South East Asia
Limited supply by scarcity of deposits, capital constraints and regulatory risk
Indian demand forecast to jump due to continued installation of blast furnaces (for steel production)
Substitute technologies unlikely to mature or scale in the short-to-medium term
Stanmore said that the key drivers of coal was steel production, whereby one tonne of steel requires 0.7 tonnes of met coal.
The global focus towards renewable energy is surprisingly a tailwind for coal consumption. Stanmore pointed out that a single wind turbine requires 170 tonnes of met coal.
Stanmore said that the company could delever its debt position quickly if the current coal price environment persists.
Finance Writer & Social Media
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