Reuters reported that Japan's Mitsui Matsushima Co Limited has agreed to help fund a coal project being developed by NuCoal Resources Limited in Australia, effectively valuing the project at AUD 360 million.

The deal comes only a week after a Singapore based firm offered to buy out an Australian resources fund, illustrating that some Asian companies are trying to take advantage of a downturn in Australian mining as sliding commodities prices and soaring costs have dented project valuations and share prices.

NuCoal said Mitsui Matsushima, a coal miner and trader, has agreed to spend up to AUD 40 million on the Doyles Creek coking coal project in the Hunter Valley coal region in New South Wales, which would give it the right to earn up to a 10% stake in the mine.

Mr Glen Lewis MD of NuCoal said that "The investment demonstrates a significant commitment to the project and the New South Wales coal industry at a time when elsewhere in the Hunter Valley job losses and a reduction to development plans and production levels are being experienced."

The Japanese firm has the option to buy a further 10% stake in the mine for a price tied to the level of customer commitments for the coal which is used in steelmaking and it is entitled to exclusively market the coal in Japan.

The AUD 40 million the Japanese company has agreed to spend effectively values the project at AUD 360 million or 47 cents per NuCoal share, well above the company's share price of AUD 0.175 ahead of the announcement.

Source - Reuters

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