U.S. miner buys Glencore's massive Donkin coal mine
The Donkin coal project, in Canada’s Cape Breton Island, will have a new owner as its majority holder Glencore (LON:GLEN) sold its 75% stake in the asset, which involves the development of one of the largest undeveloped coal deposits in North America, to U.S.-based Cline Group.
Canadian junior Morien Resources (TSX-V:MOX), which owns the 25% remaining in the project, cleared the way for the new operator Monday, as it announced it was waiving its right of first refusal to acquire the controlling interest in the mine.
Morien and Glencore have invested $43 million in the fully permitted Donkin project since 2006. The reopening of the project, located less than 30 km from the deep water port of Sydney, has been in the works for eight years, since the Nova Scotia government granted permission to get the site ready for coal production.
Devco, a former federal Crown corporation, dug the tunnels in Donkin in the 1980s but the project was abandoned before the mine opened because of a drop in coal prices.
Morien says it will work with Cline and advance discussions with the Nova Scotia government to gain final approval and move forward to commercial production.
Donkin, located less than 30 km from the deep water port of Sydney, Nova Scotia, is estimated to have reserves of at least 480 million tonnes of coal, worth more than $1 billion at current prices.
According to Dailycommercialnews.com, the project will generate around 8,500 jobs in the first five years of construction and contribute $483 million to the province GDP during the development phase.
Coal has been mined in the Sydney coal basin since the early 1860s.
Image courtesy of Morien Resources Corp.