Eurasian Natural Resources Corporation PLC, the holding company of a leading diversified natural resources group with integrated mining, processing, energy and logistical operations based in Kazakhstan, has announces the acquisition of a 25% interest in Shubarkol Komir JSC, a major thermal coal producer in Kazakhstan, for a cash consideration of USD 200 million.
Shubarkol is one of Kazakhstan's largest thermal coal producers, producing some 6.1 million tonnes of coal in 2007 and accounting for over 6% of Kazakhstan's total coal production in 2007. Shubarkol is also a local producer of semi coke, selling some 161,000 tonnes in 2007. As at 1 July 2008 and based on JORC guidelines, SRK reported that Shubarkol had 1.419 billion tonnes of measured and indicated coal resources within its coal lease of which there were 0.365 billion tonnes of probable coal reserves.
Shubarkol is majority owned by Eurasian Finance-Industrial Company JSC, a private company beneficially wholly owned by the three Founder Shareholders of ENRC who together hold 43.77% of ENRC's issued share capital. The acquisition constitutes a 'smaller related party transaction' for the purposes of the Listing Rules of the United Kingdom Listing Authority.
In connection with the acquisition, ENRC has entered into an off take agreement with Shubarkol, secured a seat on Shubarkol's board and entered into a shareholders agreement with EFIC. In addition ENRC has a right of first refusal, combined with a call option, over all or part of the remaining shares in Shubarkol held by EFIC. The call option is exercisable, at ENRC's discretion, at any time until January 31st 2011 and is expected to be subject to the approval of ENRC's shareholders and any required regulatory approvals having been obtained. The price payable on any exercise of the call option is the aggregate value of the shares to be transferred, assuming Shubarkol has a total value of USD 800 million on a fully diluted basis.
Dr Johannes Sittard CEO of ENRC said "The acquisition of Shubarkol provides for the further strategic development of the Group in the region. In addition, it strengthens the integrated business model of ENRC through securing a reliable and cost effective supply of relatively high quality thermal coal and semi-coke, thereby further enhancing the Group's position as a low cost producer."
