Australian firm Linc Energy has decided to walk away from Indian billionaire Gautam Adani's $15bn Queensland coal project, which is already four years behind schedule.
Linc said in a statement it has agreed to sell its rights to future royalties from the Carmichael coal venture, to Adani, for A$155m ($145m, £87m, €110m).
Analysts told Reuters the accord was a win-win deal for both firms – Singapore-listed Linc gets cash up front from a mine that may not be built for years while Adani gets rid of a liability on the project.
Linc's stock finished 2.02% higher on the SGX.
Linc Energy chief executive Peter Bond said in the statement: "Linc Energy has a number of good quality assets, the sale of the Adani Royalty for AU$155 million is a great example of one of these. And though, I would have like to keep this asset for the longer term, it makes sense to start to cash up on our balance sheet and commence to drop out the debt and focus on our world class assets like the Sapex shale.
He added that the price of coal has nearly halved since the Carmichael coal asset was sold to Adani four years ago and "the risk of holding the royalty long term versus what we can do with the cash today doesn't add up for us".
Adani told Reuters: "This agreement reflects Adani's confidence in the progress of Carmichael mine, which received final federal environmental approvals from the Australian government last month.
"It means [Adani] haven't given up," Tim Buckley, a director of the US-based Institute of Energy Economics and Financial Analysis, which is campaigning against fossil fuels, told the news agency.
Adani bought Carmichael from Linc, for A$500m in cash, amid a coal boom in 2010.