Hillsborough Resources Ltd. and a subsidiary of Anglo American PLC – to form a new metallurgical coal company in British Columbia.
Tuesday’s announcement came one day after Western Canadian Coal Corp. (TSX:WTN) terminated a planned takeover of NEMI to gain control over the Belcourt and Saxon coal prospects in northeastern British Columbia.
Hillsborough (TSX:HLB) announced Tuesday that it, NEMI and Anglo Coal Canada Ltd. (LSE:AAL) will consolidate their metallurgical coal assets in northeastern B.C. into a new company under a letter of intent signed by the three companies and Itochu Corp.
Anglo Coal Canada and Hillsborough will own 60 per cent and 20 per cent of the combined company, respectively.
In addition, Anglo Coal Canada will provide funding to NEMI over the next three months, subject to certain conditions. Itochu will continue to have off-take, marketing and equity conversion rights for the NEMI assets.
The parties said they intend to complete the transaction within three months with comprehensive due diligence and binding agreements.
NEMI’s deal with Western Canadian Coal Corp. began to unravel after some of the conditions of their original deal couldn’t be met, although Western Canadian had said until last week that it remained committed to completing the transaction.
On the Toronto stock market Tuesday afternoon, NEMI shares were down seven cents, or seven per cent, to 87 cents before the trading halt. Hillsborough shares were even at $1.01.