Stanmore Resources Divests Southern Wards Well Tenement

Stanmore Resources Limited (ASX: SMR) has entered a definitive Sale and Purchase Agreement with Peabody, divesting the southern part of the Wards Well tenement in exchange for cash, royalties, and infrastructure access. Peabody will pay Stanmore an upfront cash payment of US$136 million upon completion. Additionally, there's a contingent royalty of up to around US$200 million, dependent on coal price thresholds and tonnage produced. Stanmore will retain the Lancewood tenement and the northern part of Wards Well, preserving high-quality hard coking coal resources. The transaction aims to reduce startup capital for Lancewood's development. A framework agreement for collaboration has been signed, offering potential cooperation in areas like toll washing and mining of boundary reserves.

The completion of the deal is expected in 1H 2024, subject to regulatory approvals and infrastructure-sharing agreements. The CEO, Marcelo Matos, views this as a significant step in unlocking the value of assets acquired from BHP in 2022 and sees potential for further value creation through collaboration. Shareholders should note that royalty payments depend on Peabody commencing mining and coal prices, making them contingent.

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