Peabody Project

Chart - White Energy and Peabody Energy

White Energy and Peabody Energy, Inc. (Peabody) have entered into a development agreement to pursue the development of coal upgrading opportunities at Peabody’s Caballo Grande Mine in the Powder River Basin near Gillette, Wyoming. The project will be constructed in phases with an initial capacity of 1 million tonnes per annum, expanded to 20 million tonnes per annum over a five year period.

Peabody Energy is the world’s largest private sector coal company, with 2010 sales of 246 million tonnes of coal, translating into almost US$7 billion in revenues.

The Development Agreement outlines the commercial framework under which White Energy and Peabody will jointly explore the development of coal upgrading projects and provides for other rights and obligations, namely:

  • Joint venture company to be established 55% owned by White Energy and 45% owned by Peabody;
  • White Energy is to supply the joint venture with technical, construction and engineering expertise and Peabody to supply feedstock coal and marketing expertise.

Under the terms of the Development Agreement, Peabody has also been granted the right to participate with White Energy in new coal upgrading facilities in North America and China.

In connection with the Development Agreement, White Energy and Peabody also entered into a conditional subscription agreement (Conditional Subscription Agreement) under which Peabody has the right to acquire up to 14.9% of the fully diluted share capital of White Energy (Subscription Right) subject to shareholder approval of White Energy and a number of milestones in respect of the project with Peabody being met.

Status

A potential site has been selected by Peabody and preliminary air modelling has been conducted. The formal air permit application was submitted in late 2010. In the interim, site integration and material plans are being developed and engineered.

Market Strategy

Peabody will have exclusive marketing rights for the upgraded coal produced by the joint venture company. An agency agreement will be executed between Peabody CoalTrade and the joint venture company. Peabody intends to market the coal to its existing U.S. and export customer base.