(Yicai) April 15 -- Shares of Yankuang Energy Group and Yancoal Australia, which the Chinese mining firm controls, fell after Yancoal unveiled plans to acquire a majority stake in an Australian coal mine for as much as USD2.4 billion.

Yankuang Energy [SHA: 600188] closed 1.5 percent lower at CNY19.19 (USD2.81) per share in Shanghai today, while its Hong Kong-traded stock [HKG: 1171] ended down 0.3 percent at HKD14.70 (USD1.88).

Yancoal will buy all of Kestrel Coal Group, which has an 80 percent stake in the unincorporated joint venture that owns the Kestrel Coal Mine, Yancoal and Yankuang Energy announced in separate statements late yesterday, citing a binding deal.

“The proposed acquisition of 80 percent of Kestrel Coal Mine represents a strong strategic fit for Yancoal and adds another high-quality, long-life mine to our portfolio,” said Yancoal Chief Executive Shariff Burra. “Kestrel delivers increased scale and diversification to Yancoal’s portfolio and is expected to contribute premium metallurgical coal into our product mix.”

In Sydney, Yancoal Australia’s shares [ASX: YAL] dropped 2.4 percent to finish at AUD7.06 (USD4.99) each. Its Hong Kong-listed equity [HKG: 3668] gained 0.2 percent to HKD39.28 (USD4.97), after dipping by as much as 1.2 percent in the morning.

The deal involves a USD1.85 billion upfront payment and a contingent cash consideration of as much as USD550 million linked to the mine’s future operating performance.

Located in Queensland’s Bowen Basin, the Kestrel Coal Mine is one of Australia’s largest underground coal mines, boasting leading steelmakers in Japan, South Korea, India, and Southeast Asia as customers. It mainly produces high-quality hard coking coal, which accounts for about 80 percent of the total volume, as well as high-calorific-value thermal coal and semi-soft coking coal.

In terms of saleable reserves, the mine ranks second among Australia’s producing underground metallurgical coal mines. As of Sept. 1 last year, it had 164 million tons of saleable reserves, 406 million tons of resources, with an estimated life of about 25 years and potential for extension.

In recent years, the mine’s annual raw coal output ranged between 6 million and 8.1 million tons. Last year, it had run-of-mine coal of 8.2 million tons and saleable production of 5.9 million tons. Yancoal expects the mine’s saleable coal production to be around 6 million tons this year.

The transaction is subject to regulatory approvals in Australia and China, and Mitsui Kestrel Coal Investment, which owns the remaining 20 percent interest in the JV, must either waive or not exercise its pre-emptive rights.

Editor: Futura Costaglione