www.conticoal.com
Continental Coal Ltd (ASX:CCC) is a South African coal exploration and development company with current JORC resources of over 300Mt. Continental holds interests in a number of early stage and advanced stage exploration assets in various established South African Coal mining regions.
CCC was formed to take advantage of the robust domestic and global demand for coal, with particular focus on South Africa, Botswana, Mozambique and Zimbabwe.
Continental Coal snares US$65m funding for third South African coal mine
Continental Coal (ASX: CCC) has completed its debt funding and related coal, foreign exchange and interest risk management facilities to be used for the development of its Penumbra Coal Project, its third coal mine in South Africa.
The US$65 million financing is from ABSA Capital, a division of ABSA Bank Limited, one of South Africa’s largest financial service providers and a subsidiary of Barclays Bank PLC.
The funds will provide a significant boost for Continental as it is of strategic importance for its overall growth plans.
Final credit approval has been received and due diligence completed, with legal documentation nearing completion. A loan draw down schedule has been agreed between parties.
The company continues to move operations forward quickly with the commencement of the Penumbra mine development, and plans to expand its shareholder base with a London Stock Exchange AIM listing shortly.
The principal earthworks contractor has mobilised to site and commenced civil and construction earthworks, including initial ground breaking taking place in the proposed box-cut area, and run-of-mine production from the Penumbra Coal Project is forecast to increase to the targeted annual rate of 750,000 tonnes in third quarter 2012.
The export thermal coal product will be railed through to RBCT under existing rail contracts and sold to EDF Trading and other export off-take agreements.
Don Turvey, Continental Coal's CEO, said “the fact that we received two very attractive financing offers for this mine is testament to the feasibility studies we conducted and the subsequent mine development plan chosen.”
“This finance package has optimised our ongoing funding arrangements, and proven that as an emerging coal producer we are able to raise debt at attractive levels for our aggressive growth plans.”
The offer of finance comprises:
- A secured 7 year term loan facility of US$35 million to be made available to fund the development of the Penumbra Mine.
- A secured 3 year term loan facility of US$15 million to be made available to refinance existing secured indebtedness under the EDF Trading Coal Prepayment.
- A secured annually renewable working capital facility of ZAR100 million (approx. US$15 million) to fund general corporate working capital requirements.
In addition ABSA Capital will provide risk management facilities to allow the company and its subsidiaries to hedge a portion of its exposure to thermal coal prices and interest rate fluctuations. ABSA’s domestic expertise and network taps into Barclays Capital’s global capabilities and product knowledge, providing its clients with tailored financing and risk management solutions across Africa.
