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Glencore secures 49% stake in Hunter Valley Operations

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Report summary

Glencore announced on 27 July that it had reached an agreement with Yancoal to purchase a 49% shareholding in Hunter Valley Operations (HVO) subject to completion of Yancoal's acquisition of Coal and Allied from Rio Tinto. Glencore has offered a cash consideration of US$1 139 million and a 27.9% share of US$240 million non contingent royalties over a five year period (which we value at US$55.8 million). The deal represents fair value being done at a level close to our base case valuation. It is also at a slightly higher level than Yancoal's Coal & Allied deal with Rio Tinto and Mitsubishi Corporation that was struck at implied long term benchmark prices of US$69 and U$116/tonne for thermal and hard coking coal respectively. We expect this deal to offer significant upside and synergies for both Yancoal and Glencore.

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  • Glencore's high-grade thermal coal and SCC (export) production for Australia

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