London, Ontario-based natural resource company Fortune Minerals announced Wednesday that its subsidiary Fortune Coal Ltd. has entered into an agreement to form a joint venture with the Canadian subsidiary of South Korean steel giant POSCO, POSCO Canada (POSCAN). Under the terms of the agreement, POSCAN will pay C$181 million (US$189 million) in cash for a 20 percent stake in the Mount Klappan anthracite metallurgical coal project.
POSCAN will also finance 20 percent of the development and capital costs of the project, which total approximately C$154 million (US$161 million). POSCAN will initially pay C$30 million (US$31 million) upfront, C$20 million (US$20.1 million) of which will be used to fund the joint venture.
Currently, the Mount Klappan project has measured resources of 107.9 million metric tons (mt) of metallurgical coal and speculative resources of about 2.2 billion mt.