In April 2012, Project Manager Glencore (then Xstrata Coal) announced it was seeking an operating partner to assume its 75% interest in the Donkin Project. Glencore cited a change in its business strategy since first acquiring the Project, with a current focus on larger-volume mining complexes, as the reason for choosing to sell its interest.
On December 3, 2014, it was announced that Glencore had completed the sale of its 75% interest in Donkin to Kameron Collieries ULC (“Kameron”), a subsidiary of The Cline Group, LLC (“Cline”). The Cline Group’s US coal company, Foresight Energy LP, is one of the largest coal companies in the United States and well known for its underground mining expertise; currently operates three of the four most productive underground coal mines in the United States.
On December 12, 2014, Morien announced it had entered into an agreement with Kameron to exchange its 25% working interest in the Donkin for $5.5 million in cash and a production royalty on sales from Donkin (“Transaction”). Kameron also agreed to pay Morien a gross royalty of 2% on the first 500,000 tonnes of coal sales per calendar quarter and 4% on any tonnage thereafter from the Donkin Project. In addition, Morien closed a private placement in December, 2014, with Atlantic Royalty LLC, a subsidiary of The Cline Group LLC, for 3.45 million common shares in Morien at $0.30 per share, a 58% premium to market, for gross proceeds of $1,035,000.
In February 2015, Morien shareholders voted overwhelmingly (99.99%) in favour of the Transaction with Kameron. In March 2015, the Transaction closed and Morien’s 25% working interest was successfully transferred to Kameron. On closing, Morien received an initial cash payment from Kameron of $2 million. The remaining cash consideration of $3.5 million is to be paid in stages, with $2 million on the earlier of either first production from the Project and the 2nd anniversary of closing, and a further $1.5 million on the earlier of either first export sales from the Project and the 3rd anniversary of closing.