Peabody Energy got a new partner in its Mongolian joint venture on 1st of July, as Winsway Coking Coal Holdings Ltd. exercised an option to buy out Polo Resources Ltd.’s 50% share.
The three companies agreed in May to give Winsway the right to acquire Polo Resources’ stake for $35 million–$15 million up front and $20 million payable within a year of the sale. Polo was to receive a 1% royalty for coal sold from the venture under current agreements, with payments not exceeding $50 million or continuing longer than 25 years. Winsway was the largest offtaker of Mongolian metallurgical coal last year, according to a statement from Peabody.
The venture has coal and uranium licenses in Mongolia and is exploring throughout the country. Peabody has been seeking to increase its production of late. It was stymied in a recent growth effort as Australian mining company Macarthur Coal (MCC.AU) rejected its $3.8 billion purchase offer.
Peabody shares were down 1.9% at $38.37 in recent trading amid a broad decline for coal stocks. The shares have gained 28% over the past year.