Peabody Energy said it has entered into a renegotiated agreement to create a 50-50 joint venture holding Polo Resources' Mongolian coal interests for a cash contribution of up to $25.8 million.
The world's largest private sector coal company noted that Polo's coal interests could include up to 1 billion tonnes of potential resources with the majority of the coal licenses in the South Gobi coal region, strategically located for the Chinese and Asian coal markets..
Polo coal sites include Tavan Tolgoi, Ovoot Tolgoi and Nariin Sukhait.
Peabody has also been granted warrants to enable the company to acquire a 15% equity interest in Polo Resources Limited.
Peabody officials feel the creation of Peabody Polo Resources BV will help Peabody expand its presence in Mongolia. The company recently named D.L. Lobb as senior vice president of Mongolian operations. The company also has ongoing initiatives to assist the Mongolian government in large long-term coal resource development.
Last week Polo officials announced the company has made a strategic decision to refocus its human and financial resources in the uranium sector. Polo holds 100% of ten uranium exploration tenements and has seven tenements under application in the Dornogovi District, Mongolia.
On Tuesday Polo revealed it owns 5.7% of Extract Resources, the owner of the Rossing South uranium deposit in Namibia. Polo is opposed to a joint venture with Rio Tinto with Extract, claiming there are many better alternatives to create value for Extract shareholders.