Tigers Realm Coal Ltd (ASX:TIG) has increased its ownership to 100% from 80% at the Amaam North Coking Coal Project located in eastern Russia.
The company is currently in production within Amaam North at a part of the resource known as Project F.
As well as moving to full ownership of Amaam North, this transaction improves the project’s value and fundability, and simplifies ongoing corporate governance and approval processes.
The total consideration for the transaction is limited to US$25 million and payable within no more than 20 years.
This represents a marked reduction in comparison with 5% of total project gross sales revenues that would be payable under the previous structure.
Amaam Coking Coal Project
Two tenements, Amaam and Amaam North, together comprise the Amaam Coking Coal Project, located within 35 kilometres of the Bering Sea coast in Chukotka Autonomous Okrug, far eastern Russia.
Tigers Realm has 80% ownership of Amaam and now has 100% ownership of Amaam North.
The company also owns 100% of the Beringovsky Port and Coal Terminal.
Amaam and Amaam North have combined JORC compliant coal resources of 632 million tonnes with the majority of these resources being of coking coal quality.
Project F within Amaam North has 110.6 million tonnes of coal resources, 16.1 million tonnes of which have already been classified as Product (Marketable) Reserves under JORC.
Operations at Project F
The company continues to ramp up mining since commencing coal production in December 2016 at Project F within its Amaam Coking Coal Project located in eastern Russia.
Coal is trucked from Amaam to the 100%-owned Beringovsky Port and Coal Terminal, located 37 kilometres by road to the north east of the Amaam North tenement.
Phase One of Project F is in production and ramping up to 600,000 tonnes per annum with relatively low capital expenditure required to grow Project F to an interim 2+ million tonnes per annum capacity.
With site operating costs of circa US$41 per tonne FOB, Project F has the potential to be one of the world’s lowest cost coking coal producers.
Project F has a low stripping ratio, short overland transport to port, and low third party charges due to ownership of the port.
Transaction details
The vendor of the 20% interest will receive consideration for the Amaam North of up to US$25
million, to be paid within 20 years in annual payments.
Payments will be calculated as a percentage of gross sales revenue from coal sales from the Amaam North Project, on the following terms:
- Subject to certain rights of TIG to defer payment of any annual payment, annual payments are 1.5% of gross sales revenues for the first five years, 2.25% of gross sales revenues for the three years following, and 3% of gross sales revenues thereafter;
- Under certain circumstances, TIG may elect to pay up to 50% of the amount due for any year in kind by issue of TIG shares; and
- Irrespective of the amount paid, annual payments will cease after 2037.