Wesfarmers, Blackham resolve Scaddan dispute

Wesfarmers Premier Coal Ltd and Blackham Resources Ltd have ended their dispute over the Scaddan Energy Project tenements near Esperance, by signing a joint venture agreement to develop the project.

The agreement between the parties settles their competing claims to the tenements and aims to establish an optimal basis for future economic development of the project.

Under the agreement, Blackham and Premier Coal will have 70 per cent and 30 per cent interests, respectively, in the exploration, mining and downstream processing associated with the development of the project.

Blackham and Premier Coal will be required to contribute proportionately to all costs incurred in furthering the downstream processing (including coal to liquids (CTL)) potential of the project.

Premier Coal has agreed to provide Blackham with all exploration, commercial and economic data regarding the project and technological or other information regarding CTL.

Blackham also agrees to make the following payments to Premier Coal in compensation for receiving the technical data for the Project:

(a) $1.2 million upon the grant of the last of the Blackham Applications in cash or shares at Blackham's discretion;

(b) $1.3 million upon a decision to commence commercial mining operations for lignite in cash or shares at Blackham's discretion; and

(c) a royalty of $0.25/tonne (indexed to Perth CPI from a base date of 1 July 2007) on Blackham's interest of the annual ROM coal tonnes extracted from the Deposit Area and payable up to a capped royalty volume of 50 million tonnes after which no further royalty shall apply.

Payment of the royalty will commence on the date one year after the receipt of first income from commercial operations.

Effectively, Blackham and Premier Coal together have priority applications and granted mining leases over the entire Scaddan Tenements.

Premier Coal and Blackham have agreed to cease all court and other proceedings against each other including those under section 111A of the Mining Act.