GCM Resources shares were sharply higher on Monday morning after the company announced a funding agreement with PowerChina International.
GCM Resources has signed a $1 billion contract with PowerChina International for mine development works at the Phulbari Coal and Power Project in Bangladesh.
The contract covers design, construction and commissioning of mine infrastructure, overburden removal, dewatering, and mining of valuable industrial mineral co-products expected to generate early cashflow.
GCM Resources shares were 42% higher at the time of writing.
The four-year mine construction contract is a step towards eventual coal extraction to fuel power plants, with first coal exposure expected in two years. GCM and PowerChina plan additional contracts for coal mining operations to supply at least 6,600MW of power generation over 30 years.
The contract’s notice to proceed awaits government approvals and financial closure, with PowerChina committed to assisting project financing per a previous agreement. GCM has received expressions of interest to purchase Phulbari coal from independent power producers SS Power and Barisal Electric Power Company, representing 27% of Bangladesh’s current coal power market.
Bangladesh presently has 6,035MW of installed coal-fired capacity requiring around 16 million tonnes of coal annually, equivalent to Phulbari’s planned production. However, the government aims to increase coal power to 11,830MW, necessitating 36 million tonnes of coal per year.
