Xstrata bids $153 million for Canada's First Coal Corporation

Swiss diversified miner, Xstrata has made a $153 million (C$147 million) cash bid to buy privately owned First Coal Corporation in order to gain control of the Canadian miner's coking coal assets in British Columbia.

Under the deal that has been unanimously accepted by First Coal's directors, Xstrata has offered to pay C$1.75 per share and shareholders representing more than 50 per cent of First Coal's equity have agreed to sell their shares to Xstrata under lock-up agreements.

Vancouver-based First Coal has 52,802 hectares under licence and 41,190 hectares under application for licences in the Peace River Coalfield in northeastern British Columbia.

First Coal Central South property is expected to start mine construction in 2013, which at full production will produce 1.5 million tonnes per year, while exploration and development of its South Cirque property is planned for production in 2017 and yield around 3 million tonnes of coal annually.

Zug-based Xstrata's coal division, which accounted for 29 per cent of its $30.5 billion revenues last year, will add coal assets to its existing mines in Canada. Xstrata Coal also has coal mines in South Africa, Australia and Colombia.

In Canada, Xstrata is developing its 75 per cent-owned Donkin underground coal mine in Nova Scotia, which when developed could produce 2.75 million tonnes per year of coal annually for the domestic and export markets.