Gujarat NRE to up stake in Australia's Zelos to 85 pc

(Hindu Business Line, May 09, 2006)

In an innovative mine transfer, share swap deal, Gujarat NRE Coke Ltd will soon hike its share of the equity stake in Australian listed company Zelos to 85 per cent.

At present, Gujarat NRE Coke holds 19 per cent of the equity stake in Zelos, which is engaged in mineral exploration and development of mineral assets in Australia's New South Wales and Tasmania regions.

Speaking to Business Line, Arun Kumar Jagatramka, Managing Director of Gujarat NRE Coke, said the group had acquired its second coal mine in Australia — named NRE Avondale — through its wholly-owned subsidiary, Gujarat NRE Coke SCGL Pty Ltd, in July last year for a lease transfer price of AS$2 million. Subsequently, a further AS$1 million had been spent on investigations, preparation of the mine plan and on exploring various other options. Work for opening the mine, which has been closed for the past 20 years, began on May 4. Located in the southern coalfields of New South Wales, NRE Avondale has reserves of 200 million tonnes and a recoverable life period of 30 years.

Jagatramka said it had been proposed to transfer the lease of NRE Avondale to Zelos in lieu of a share swap deal that has been valued at AS$34 million. When the deal is concluded, Gujarat NRE Coke's share of the equity stake in Zelos will go up from 19 per cent at present to 85 per cent. `This is a win-win deal for all parties involved,' Jagatramka said, adding that Gujarat NRE would have the management right over Zelos. The entire deal would be formalised by July this year.

According to him, Gujarat NRE Coke has invested a total of AS$50 million on various business initiatives in Australia. It first acquired the NRE No.1 colliery, which is located 18 km north of NRE Avondale. NRE No.1 has reserves of 300 million tonnes and a mine life of 100 years, Jagatramka said.