Vancouver Five years ago, Hillsborough Resources was trading in the 5-to-50 range and barely staying afloat at its Quinsam coal mine on Vancouver Island, B.C. Today the profitable company and its expanded portfolio of coal assets have attracted the attention of Anglo Coal, a unit of mining giant Anglo American (AAL-L).
A non-binding letter agreement between the companies sets the stage for Anglo Coal to possibly acquire a minority equity position in Hillsborough, which now trades at about $1.50 per share.
The preliminary agreement also allows Anglo Coal to form one or more joint ventures to explore and develop nine of eleven coal properties held by Hillsborough in the coalfields of northeastern B.C.
The companies would have to sign a definitive agreement and seek respective board approvals before the proposed opportunities could proceed. Anglo Coal also has the right to carry out due-diligence studies for the properties.
In a prepared statement, Hillsborough President David Slater welcomed the alliance with Anglo Coal for potential development of the metallurgical coal properties. “While we were quite prepared to go it alone, the presence of a highly professional organization like Anglo adds exceptional depth to our ability to market the product.”
Slater added that Anglo’s expertise would help facilitate development of a mining project “of the scale we envision for Five Cabin.”
Hillsborough recently completed a 110-hole, 13,000-metre drill program at the Five Cabin property near Tumbler Ridge. The company sees potential for a two-phase mine, with the first phase based on a production level of between 1.2-1.6 million tonnes of product each year. The second phase of the future mine expansion has a preliminary production target of 3-5 million tonnes per year.
The company recently started commercial production at the Crossville underground coal mine in Tennessee, which is expected to achieve its full annual production target of 600,000 tons next year. In addition to its existing mines and development properties in northeastern B.C., the company is advancing the Bingay Creek metallurgical coal project in the Elk Valley region of southeastern B.C.
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