Shares in Aviva Corporation have slumped after it decided not to extend its option over the only coal deposit for the Coolimba power project in the Mid West, part of the ramifications of the lost power supply tender contract to Verve Energy.
Shares in Aviva Corporation have slumped after it decided not to extend its option over the only coal deposit for the Coolimba power project in the Mid West, part of the ramifications of the lost power supply tender contract to Verve Energy.
Shares in Aviva Corporation have slumped after it decided not to extend its option over the only coal deposit for the Coolimba power project in the Mid West, part of the ramifications of the lost power supply tender contract to Verve Energy.
In a statement today, Aviva said it has not extended the option over the Central West coal deposit.
"Following the decision by Synergy not to contract for new power supplies there is no viable
commercialisation path for the Coolimba coal fired power project and as such the company was unable to make a compelling offer to the owner of the mining rights," Aviva said in a statement.
It added that it will discuss with the owner of the deposit, Iluka Resources, whether it will continue to progress the environmental approval.
Last month, Synergy awarded Verve a contract to supply at least 638 megawatts of power under its 2008 power procurement tender, and named Verve as its preferred tenderer for further electricity supplies from its existing generators.
Aviva was banking on the contract, and as of late last month, has started to shop around its $1 billion Coolimba project.
Aviva said today it will continue to progress the environmental approvals for the project, which includes a 360MW gas-fired power station as well as a 400MW coal-fired power station.
The company also said today it will consider the impairment to the holding value of Coolimba during the preparation of its half-year accounts, advising that it was likely that most of the $11 million value will be written down.
Shares in Aviva dropped 0.8 cent, or 10.5 per cent, to 6.8c at 13:04 AEDT. It is the lowest share trading price for Aviva in 30 months.
The announcement is below:
Aviva has not extended its option over the Central West Coal deposit. Following the decision by Synergy not to contract for new power supplies there is no viable commercialisation path for the Coolimba coal fired power project and as such the Company was unable to make a compelling offer to the owner of the mining rights.
Aviva will continue to prosecute the imminent Environmental Approvals for the Coolimba Power Project and infrastructure corridor, which includes a 360MW gas fired power station as well as the 400MW coal fired power station.
Aviva will discuss with the owner of the coal rights whether it wishes to continue to progress the Environmental Approval for the coal deposit.
The Board will consider the impairment to the holding value of the Project during the preparation of the half year accounts and provisionally advises that it is likely that most of the $11M value will be written down.