REG - BHP Group Limited - BHP announces divestment of Blackwater and Daunia

BHPAnnouncement

18/10/2023 07:00

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RNS Number : 5056Q  BHP Group Limited  18 October 2023

Exchange release

18 October 2023

 

BHP announces divestment of the Blackwater and Daunia

BHP and Mitsubishi Development Pty Ltd (MDP) have signed Asset Sale Agreements
to divest the Blackwater and Daunia mines, which are part of the BHP
Mitsubishi Alliance (BMA) metallurgical coal joint venture in Queensland. Each
of BHP and MDP hold a 50% interest in BMA.

Two wholly owned subsidiaries of Whitehaven Coal (Buyers) have agreed to
acquire the Blackwater mine and Daunia mine respectively for cash
consideration of up to US$4.1 billion. Whitehaven Coal has guaranteed the
obligations of each Buyer.

The purchase price comprises US$2.1 billion cash on completion, US$1.1 billion
in cash over 3 years after completion and the potential for up to US$0.9
billion in a price-linked earnout payable over 3 years. Excluding the
price-linked earnout, this represents an Enterprise Value/Reserves multiple of
12.8/t 1 .

The sale is subject to the satisfaction of certain conditions, including
competition and regulatory approvals. The Buyers have agreed to pay a US$100
million deposit on signing which BHP and MDP are entitled to retain if the
proposed divestment is terminated in certain limited circumstances.

Completion is expected to occur in the June 2024 quarter. The Buyers will
assume economic and operating control of the Daunia and Blackwater mines on
completion of the sale, including all current and future environmental
liabilities and rehabilitation obligations.

BMA will continue to operate the assets until completion and work closely with
the Buyers and Whitehaven Coal to ensure a successful transition of ownership.
BHP will support certain transitional services to the Buyers for a short
period of time after completion.

BHP's President Minerals Australia Geraldine Slattery said: "This transaction
has delivered a good outcome for the BHP Mitsubishi Alliance, our workforce
and the communities around the Blackwater and Daunia operations.

Whitehaven Coal has a strong track record as a responsible and reliable
operator, and we will work closely with them to achieve a smooth change of
ownership focused on maintaining safe and productive operations and supporting
people and communities through the transition.

In line with our long-term strategy, we will continue to develop our
high-quality metallurgical coal assets in Queensland, which are sought after
by global steelmakers and needed to support the energy transition."

Net proceeds will be used to reduce the Group's net debt.

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 1  Based on Blackwater Marketable Reserves of 183Mt and Daunia Marketable
Reserves of 67Mt, as at 30 June 2023 as disclosed in BHP's 2023 Annual Report.

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