2 Nov 2016

$46m up-front payment for Solid Energy's coal mines

6:12 pm on 2 November 2016

The buyers of Solid Energy's main coal mines will pay $46 million up front, and could pay as much as $50m extra if coal prices rise.

The Stockton mine on the West Coast.

The Stockton mine on the West Coast. Photo: Supplied

Phoenix Coal - a partnership of coal company Bathhurst Resources and food group Talley's - is buying the Stockton mine on the West Coast, and the Rotowaro and Maramarua mines in Waikato, subject to regulatory approval.

Solid Energy was put into administration a year ago, when it couldn't pay back almost $400m of debt because of a slump in world coal prices and demand that battered its earnings.

In a release to the Australian Stock Exchange, Bathhurst said the joint venture would pay up to $50m, provided coal from the Stockton mine fetched at least $150 a tonne.

World coal prices have doubled in the past few months as China has closed down uneconomic mines and imported more.

But a global price benchmark still put the average price at about $104 a tonne.

The new Phoenix Coal has raised $55m, with Bathhurst investing $26m, Talley's $14m, and the BNZ providing $15m in debt. After paying for the mines the company will have $9m in working capital.

Several smaller former Solid Energy mines have been sold to private mining or investment companies.

The sale of Solid Energy assets was all but complete with creditors - mainly banks - likely to be repaid about half of what they are owed.