(EnergyAsia, July 4 2012, Wednesday) — Canada’s Erdene Resource Development Corp said it has agreed to separate its domestic and Mongolian mineral and coal assets into two companies.

Erdene will sell off its 25% interest in the Donkin coal project in Cape Breton in Canada’s Nova Scotia province to another Canadian firm, Advanced Primary Minerals Corp. Xstrata Coal Canada Ltd, the project manager, will retain its 75% stake.

Donkin is expected to produce 3.5 million tonnes of raw coal per year that would be washed to provide 2.75 million tonnes of coking and thermal coal for export mostly to Asia as well as domestic use.

In Mongolia, Erdene said it focused much of its exploration efforts on a new gold discovery, Altan Nar, and advancement of the Zuun Mod copper-molybdenum project. Having these assets in a separate public company will result in a dedicated Mongolia management team with greater flexibility to access capital for future programmes.

If the deal is approved, Erdene shareholders will receive APM shares for the sale of its North American interests. The transaction will require the approvals of the regulators, the Nova Scotia Supreme Court, and the shareholders of Erdene and the minority shareholders of APM.

Erdene said the proposed transaction aims to unlock and maximise shareholder value by creating two strategically-positioned public companies, one focused on Donkin and the other on minerals exploration and development in Mongolia.

“Given Xstrata’s announcement of its intent to sell its interest in Donkin, the project is expected to go through a transformational ownership process later this year, which is anticipated to bring the project to production,” said Erdene.