Summit News

White Energy is set to expand its coal business with the $486 million acquisition of two NSW coal assets from Cascade Coal.

Cascade is majority owned by White Energy directors.

White Energy, five of whose directors own 60.1 per cent of Cascade's shares, was offered a free-option agreement to purchase the NSW Mt Penny and Glendon Brook assets.

It is understood the common directors want to merge the assets into White Energy to develop both interests together.

"Because of the close involvement of a number of Cascade shareholders with White Energy, Cascade decided to offer White Energy the opportunity of owning and developing Cascade assets," White Energy chairman Travers Duncan said.

White Energy is fast emerging as a mid-tier coal company, which focuses on cleaner coal technology. The company has a patented process that upgrades low-quality, sub-bituminous, low-sulphur coal into briquettes that boost energy output by 35 per cent. Mr Duncan, along with coal associate Brian Flannery, took the top roles at White Energy earlier this year after their company, Felix Resources, was taken over by China. White Energy in April took over South Australian Coal, which was spun off from Felix Resources when that company was taken over by Chinese state-owned Yanzhou Coal Mining in a $3.5 billion deal last year. Through the SACL deal, Mr Duncan became chairman of White Energy, Mr Flannery became chief executive and former Felix board members Hans Mende and John Kinghorn joined the board of White Energy in non-executive roles.

In its latest deal to expand, White Energy would pay $41m in cash to Cascade and fund the balance from its own shares, the company said.

It would also assume $14m in liabilities as a result of the deal, giving the two coalmines a total enterprise value of $500m.

Glendon Brook is a semi-soft coking coal development in the Hunter Valley.