Ben Magara's Exxaro is buying Anglo American's half of an Australian mine to sell the lot

Exxaro Resources is buying the half of an Australian coking coal project it does not already own, so that it can sell the whole thing.

The South African miner has agreed to dispose of the Moranbah South tenements in Queensland's Bowen Basin to Stanmore Resources for $105 million, about R1.68 billion. It holds 50 percent through a joint venture with Anglo Coal (Grosvenor), a subsidiary of Anglo American, and has exercised a pre-emptive right to acquire the rest.

The right was triggered by Anglo's agreement in May to sell its Australian steelmaking coal assets to Dhilmar QLD Ltd, a privately held British company, for $3.86 billion including $2.3 billion in upfront cash. Moranbah South formed part of that package.

Once Exxaro completes its purchase, the joint venture terminates, Exxaro briefly holds the full tenement package, and the transfer to Stanmore proceeds.

Exxaro has not disclosed what it is paying Anglo American, which means the net cost or gain from the whole exercise cannot be calculated from the figures released.

Ben Magara, Exxaro's chief executive, said the sale fits a strategy built around three areas.

"As part of this strategy, we showed our investment in Moranbah South as non-core," he said, referring to a focus on South African coal, renewable energy and what the company calls future-facing metals.

Moranbah South was Exxaro's only asset outside South Africa. It carries a design capacity of 18 million tonnes a year and resources supporting a 30-year mine life, and it required management attention several time zones from everything else the company runs. Exxaro tried to sell its stake in 2017 without attracting acceptable bids, then reassessed the development plan in 2018 as coal prices rose.

The disposal continues a clear-out. Exxaro sold its ferroalloys business in October, took control of the Tshipi manganese mine in the Northern Cape in a transaction that became unconditional in January, and is seeking a 51 percent interest in Mokala. Magara has also signalled interest in copper.

What Stanmore is getting is a resource sitting directly against assets it already owns.

The tenements hold 724 million tonnes of measured and indicated resources in the Goonyella Middle Seam, expected to be premium hard coking coal. They sit immediately alongside Stanmore's Eagle Downs and Isaac Downs Extension projects, near the producing Isaac Plains Complex outside the town of Moranbah, and the company acquired Eagle Downs from South32.

"The acquisition of the Moranbah South tenements will represent a significant milestone for Stanmore's development portfolio, increasing our resource base and strengthening the platform to deliver on our future growth aspirations," said Marcelo Matos, Stanmore's chief executive and executive director.

He said the resource is expected to be premium hard coking coal quality and could potentially be accessed through mine infrastructure at Eagle Downs, should that project be developed.

The deal also removes a liability. Matos said acquiring 100 percent of Moranbah South extinguishes up to $60 million of deferred and contingent consideration under a 2024 Designated Area Agreement, which had given Stanmore access to the Isaac Downs Extension through the Moranbah South tenements.

Stanmore will fund the purchase from cash and existing liquidity, and no shareholder approval is required. Completion is expected before the end of the fourth quarter, conditional on Exxaro's own acquisition closing first and on approvals from the Foreign Investment Review Board, the Australian Competition and Consumer Commission and the relevant minister.

Exxaro is listed in Johannesburg under the ticker EXX and chaired by Geoffrey Qhena. Its South African coal operations remain the core of the business.