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Whitehaven, Aston Said to Strike Deal, Plan Statement Today

Whitehaven Coal Ltd. and Aston Resources Ltd., the Australian coal miners that said on Dec. 5 they were in talks to merge, reached an agreement on the terms and plan to make an announcement today, according to two people with knowledge of the deal.

The transaction will include Boardwalk Resources, a privately held coal mining investment company backed by Nathan Tinkler, Aston’s chairman, said one of the people, who asked not to be identified because the details are private. The people declined to disclose the structure of the deal.

Whitehaven has a market value of A$2.9 billion ($3 billion), and Aston has a market value of A$2 billion, according to Bloomberg data. Joining the two companies would combine Aston’s Maules Creek project in the Gunnedah Basin with nearby Whitehaven mines that produced 4.2 million metric tons of coal last year as demand from China and India grows.

This year there have been 79 coal deals involving companies from Australia, the world’s biggest coal exporter, worth $9.37 billion, compared with last year’s record $9.44 billion, according to data compiled by Bloomberg. The biggest of this year was Peabody Energy Corp.’s $4 billion takeover of Macarthur Coal Ltd. in July.

Adjacent Operation

The deal may include a cash component for Whitehaven shareholders, the Australian Financial Review reported today, without saying where it obtained the information.

Tim Allerton, of City PR, an external spokesman for Aston Resources, declined to comment as did Tony Haggarty, managing director of Whitehaven.

Whitehaven, based in Sydney, had cash and near-cash items of A$141 million as of Dec. 31, while Aston had cash of A$342 million. Whitehaven put itself up for sale in October last year, ending the process in May, saying the offers it received didn’t reflect the value of its assets.

Aston’s Maules Creek project, which it bought for A$480 million in February 2010 from Rio Tinto Group, is located within 20 kilometers (12 miles) of Whitehaven’s Narrabri North mine in New South Wales state. Maules Creek is scheduled to start output in the second quarter of 2013, with production rising to more than 10 million metric tons of semi-soft coking coal used in steelmaking from 2014 and will be using the same rail and port as Whitehaven.

Whitehaven plans to boost production to almost 14 million tons of coal for fiscal 2014 ending June 30, it said in a Oct. 28 presentation. Whitehaven is forecast to earn net income of A$63 million in the six months to Dec. 31, according to data compiled by Bloomberg.

Global seaborne demand for coking coal will grow by 5 percent annually to 2025, as Chinese steel output increases to about 1.1 billion tons, BHP Billiton Ltd., the biggest exporter, said Sept. 30. Every ton of crude steel needs about 600 kilograms of metallurgical coal, BHP said at the time.

Globally, there have been $35.4 billion worth of coal takeovers this year, compared with the record $36.7 billion last year. The average premium for those deals was 22 percent, the data show.

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