GVK, Australia's Hancock extend talks deadline: report
18 July 2011
Hyderabad-based GVK Power & Infrastructure Ltd and Australia's Hancock Prospecting have extended the deadline for exclusive talks until end August over the Australian miner's two coal mines due to differences over valuation, Reuters today reported, citing two sources with direct knowledge of the matter.
GVK had first started talks with Hancock in February 2011 and has both companies have since extended the deadline twice.
GVK, promoted by billionaire GV Krishna Reddy, is seeking to acquire Hancock's Alpha Coal and Kevin's Corner mines at a reported price tag of around $1.5 billion.
In May, GVK had started talks with ICICI Bank, Standard Chartered and Bank of Baroda to borrow as much as $850 million for the acquisition. The funds will be used to pay Hancock $500 million for equity in the mines, and another $350 million as compensation for costs incurred for running them.
Founded in 1992, West Perth, Australia-based Hancock Prospecting is a junior coal and iron ore miner operating two coal mines in the Galilee Basin in Central Queensland with combined resource of 7.9 billion tonnes of JORC compliant thermal coal.
The Alpha Coal mine is a thermal coal deposit, which has an expected mine life of 30 plus years. It will be a 30 Mtpa open-cut coal mine with sufficient resources to extend the project life well beyond 30 years.
The Kevin's Corner Project is also a thermal coal deposit and lies adjacent to the Alpha Coal mine. This deposit contains approximately 4.3 billion tonnes of JORC. The Project will have a capacity of 30 Mtpa via open-cut and underground longwall operations. The life of the mine is approximately 30 plus year.
Both these mines will be connected to a proposed multi-user rail and port facilities. Hancock's coal is suitable for combustion in the majority of Asian and Indian power stations. The Project is expected to commence construction in 2012 and with first production in late 2014 dependant on gaining relevant approvals.
GVK, which currently produces 900 megawatts of power, needs thermal coal for its upcoming power projects. The group currently has 3,500 megawatts of power under construction including a 540 megawatt plant in North India.