Atlantic Coal (LON:ATC) has raised £1.7m through an equity placing with certain new and existing shareholders. The proceeds will be used to complete the last stage of infrastructure works at the company's primary asset, the Stockton Colliery in Pennsylvania.
At Stockton, Atlantic intends to increase its run-of-mine (ROM) production of saleable washed anthracite coal from 250,000 tons to 500,000 tons. Stockton has a current reserve of 4.2Mt (million tons) of ROM coal, equating to approximately 2.1Mt of washed anthracite product.
"In addition to our increased production capacity we are experiencing strong summer sales, and with this in mind, the board is committed to maximising upon this opportunity using the funds raised in the placing,” Atlantic Coal MD Steve Best commented.
The company is issuing 427.5 million new shares, representing 22% of Atlantic's enlarged issued share capital, at 0.4p each. Through the placing, participants will also receive one warrant for each placing share, with the warrants exercisable at 0.65p for two years.
Three of the company’s directors - chairman Adam Wilson, MD Steve Best and non-executive director Peter Chinneck - participated in the placing, collectively subscribing for 150m shares.
Wilson bought 62.5m shares taking his holding to 148.7m shares, which represents 7.77% of the enlarged issued share capital. Best also subscribed for 62.5m shares and he now owns 194.8m shares for 10.18% of the company. Chinneck bought 25m shares and he now has 181m shares, representing 9.46%.
Atlantic Coal also noted that part of the funds raised will be used to refinance the company's debt.
The company highlighted that trends in its markets are currently positive. “The coal market in the US is currently buoyant, and the demand for anthracite seems to be rising and the price hardening,” Best added.
“The board remains centred on developing Stockton, having already effectively implemented a new mine plan to increase efficiencies at the mine, and is confident that production numbers and sales will continue to increase.”
Furthermore, Atlantic Coal notes that the recent addition of the Liebherr excavator at Stockton has enabled it to access high quality anthracite in the Stockton basin has been greatly improved and the production profile at the mine is increasing significantly. Since the excavator’s arrival the amount of overburden being removed has increased by more than 20%.