Rio Tinto has reached a binding agreement for the sale of its Mount Pleasant thermal coal assets to MACH Energy Australia Pty Ltd for US$224 million plus royalties.

Mount Pleasant is a large-scale, thermal coal asset located in the Hunter Valley of New South Wales, Australia, with total marketable reserves of 474 million t.

This agreement includes a payment on completion of US$83 million, two unconditional deferred payments of US$58 million each payable 8 and 16 months from completion, a conditional payment of US$25 million, and royalties, payable quarterly at two per cent of Gross FOB Revenue for coal sold from the first 625 million t of ROM coal when prices exceed US$72.50/t.

Jean-Sébastien Jacques, Rio Tinto Copper & Coal CEO, commented: “these agreements for over US$800 million in asset sales deliver significant value for our shareholders, with the potential for future royalties from Mount Pleasant. We believe Mount Pleasant can have a very positive future under its new owners with different priorities for development and capital allocation.”

The proceeds of the sale will be used for general corporate purposes. As of 30 June 2015, the project had gross assets valued at US$144 million and no profits.

With the recently announced binding agreement for the sale of Rio’s interest in the neighbouring Bengalla coal Joint Venture, this amounts to US$830 million of agreed sales. The company now announced or completed US$4.7 billion of divestments since January 2013.

The sale is subject to certain conditions precedent being met, including completion of the restructure of Coal & Allied and regulatory approvals, and is expected to close in the second quarter of 2016.

Edited from press release by Harleigh Hobbs