Coal miner New Hope Corporation has announced plans to acquire fellow Australian mining company Malabar Resources in a deal valued at approximately A$1.8 billion. The takeover will be executed through a share issuance, with New Hope offering one of its shares for every two Malabar shares held, valuing Malabar at around A$2.92 per share.

New Hope currently holds a 22 percent stake in Malabar, which is in the early stages of scaling up production at its Maxwell underground mine in New South Wales. The Maxwell mine is located near New Hope’s Bengalla operations in the Hunter Valley, with only BHP’s Mt Arthur mine situated between them. The combined entity is expected to have a total market capitalization of roughly A$6.3 billion if the deal receives approval from Malabar’s other shareholders.

Malabar Resources reported a net loss of A$36.6 million after tax in the most recent financial year, following a previous year net loss of A$12.4 million, as per filings with the Australian Securities & Investments Commission. During the last financial year, Malabar sold 808,000 tonnes of coal, including about 600,000 tonnes from its own mines. The company achieved an average coal selling price of US$130 per tonne from Maxwell, which is around 7 percent above the industry benchmark.

New Hope's chief executive, Rob Bishop, who also serves on Malabar’s board, emphasized the growth potential inherent in the acquisition. Malabar only commissioned its underground longwall mine in April and aims to increase saleable production from Maxwell to 5.5 million tonnes annually over time. The integration of Malabar’s high-grade thermal coal is expected to enhance New Hope’s overall product value.

In the last financial year, New Hope produced approximately 11.6 million tonnes of coal. With the addition of Maxwell’s output, production is projected to rise to about 17 million tonnes by 2028 and potentially reach 19 million tonnes in the longer term.

The transaction will also involve New Hope assuming Malabar’s debt, consisting of a recently refinanced US$330 million loan. Analysts note that New Hope’s cost of borrowing is significantly lower at around 2.6 percent compared to Malabar’s 14 percent loan interest. This differential suggests a likely refinancing for the acquired debt.

The proposed acquisition constitutes another move by prominent coal industry figures Tony Haggarty and Allan Davies, who have previously played key roles in major mining transactions and expansions, including the sale of Excel Coal to Peabody Energy in 2006 and leadership at Whitehaven Coal.

Shares of New Hope closed up 5.8 percent at A$6.18 following the announcement.