Wed Jul 13, 2011 2:41pm GMT
* Fortune says JV to develop and start production at Mount Klappan
* POSCAN to pay C$181 mln for 20 pct stake in project
* POSCAN to also fund 20 pct of development, capital costs
* Fortune shares up 17 pct
July 13 (Reuters) - Canadian coal miner Fortune Minerals said its unit, Fortune Coal Ltd, formed a joint venture with a unit of South Korea's POSCO, the world's third-biggest steelmaker, to develop and start production at a coal project in northwest British Columbia.
Ontario-based Fortune Minerals' shares, which have more than doubled over the past year, rose 18 percent, before paring some gains to trade up 13 percent at C$1.65 on Wednesday on the Toronto Stock Exchange.
As per the deal, POSCO Canada Ltd (POSCAN) will pay C$181 million in cash for a 20 percent stake in the Mount Klappan coal project, with the rest being held by Fortune.
Fortune said POSCAN would pay C$30 million upfront, of which C$20 million would be used to fund the joint venture.
"This transaction expands our presence in North America, which already includes investments in the Mount Hope Molybdenum Project and Elk Valley Coal," POSCAN President Yong Keun Kim said in a statement.
POSCAN will also provide funding for 20 percent of the total development and capital costs of the project, which amounts to C$154 million, Fortune said.
The Mount Klappan metallurgical coal project contains speculative resources of 2.2 billion tonnes and measured resources of 107.9 million tonnes, with 15,866 hectares of coal exploration licences, Fortune said.
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