Australian Mining firm Linc Energy agrees to sell Galilee coal tenement to Indian company Adani Enterprises

Online, August 5, 2010 (Newswire.com) - Australia Aug, 5, 2010 - Australian Mining firm, Linc Energy Tuesday announced that it had reached an agreement with Adani Enterprises for the sell of its Galilee coal tenement to the Indian company. The Australian miner said the deal agreed on would see the Indian firm, Adani Enterprises remit in cash and royalty the value of the investment that was placed at a $2.7 billion. This makes the Linc Energy-Adani Enterprises deal the biggest single mine investment in Australia to be undertakenbyanIndian company.

Analysts are already upbeat over the deal forecasting that it might bring about a wave of similar deals from the Asian economic tiger as it seeks to increase its coal reserves in the face of the forecast future coal shortages. In that breadth, the wave of Indian coal miners keen on Australian coal assets will more than triple as forecast already show that India may double its electricity output in a decade's time.

Linc Energy most does business in underground coal gasification and is expected to get A$500 million cash and an additional A$2 for every tone in royalty for the initial 20 years that the Indian will be producing coal from the Galilee tenement. Linc Energy's chief executive, Peter Bond termed the deal as "fantastic" reiterating that it still allows the Australian firm the option of selling its royalty agreement and turn it into capital flow immediately or alternatively own it and get the 20 years' benefit of cash flow.

However, analysts believe the deal was a win-win as both companies stand to gain immensely. Whereas Adani Enterprises will be getting quality coal resources at an affordable price, Linc Energy on the other hand will be securing a long term income flow from its royalty agreement.

The Galilee coal tenement has about 7.8 billion tones of certified indicated resources and according to Linc Energy, the tenement can procure up to 60 million tones per annum once the mining process gets fully underway. However, Adani Enterprises chief executive, Devang Desai said the company would fully begin operations in the Galilee tenement, located in Queensland, Australia after a period of four years.

There is expected to be an increase in demand for coal in India, as forecast show the country may experience a shortfall of 189 million tons per annum by the year 2015, despite its significant coal reserves as expansion and economic growth dwindle the reserves.