🕐19.10.10 - 03:27 Uhr
Continental Coal secures A$61 million to fast track development of third South African coal mine
Continental Coal Limited (CCC)
ASX Announcement
19 October 2010
Continental Coal completes A$61 million Convertible Note and equity funding
agreements to fast track development of third South African coal mine
Key points:
- Continental has completed A$61 million in funding, via a A$10 million
Convertible Note a US$30 million oversubscribed Equity Placement to
institutional investors in Europe and South East Asia and investors in
Australia and a US$20 million coal loan facility from EDF Trading,
- Funding allows completion of the Mashala Resources acquisition and funds
the development costs of the Companys third export focused coal mine at
the Penumbra Underground Project,
- Off-take agreement entered into with EDF Trading for export coal from the
Ferreira, Penumbra and De Wittekrans mines,
- Agreement reached for advance of US$20 million from EDF Trading facility
under an existing documented facility, with US$15 million available to
be drawn on completion of the Mashala acquisition and balance on
satisfaction of certain milestones,
- Successful completion of funding activities ensures Continental requires
no coal hedging for and is less reliant on project financing for the
development of Penumbra Coal Mine and has a suitably strengthened balance
sheet to underpin its aggressive development activities.
Emerging mid-tier Southern African focussed coal producer Continental Coal
Limited (ASX: CCC) ("Continental" or the "Company") is pleased to
announcement the raising of A$40.5 million, via a Convertible Note and an
Equity Placement, to fund the acquisition, by the Companys South African
subsidiary Continental Coal Limited ("CCL"), of unlisted South African
thermal coal mining and export coal producing company Mashala Resources
("Mashala") and the development of the Companys third coal mine at the
Penumbra Project in South Africa.
In addition to the funding successfully completed the Company is also
pleased to announce the broadening of its off-take agreements with EDF
Trading which now extend over its export thermal coal production from
Ferreira, Penumbra and De Wittekrans.
In addition agreement has been
reached with EDF Trading for the advance of US$20 million, with US$15
million to be drawn on completion of the Mashala acquisition and balance on
satisfaction of certain development milestones.
Commenting on the successful completion of the now finalised funding and
the further strengthening of the relationship with EDF Trading, Continental
Coal Limited Chief Executive Officer, Mr Don Turvey, said: "We have been
overwhelmed by the level of support shown by the capital markets throughout
the world for not only the acquisition of Mashala, but also for our vision
to aggressively grow Continental Coal into an substantial South African
mid-tier coal producer,"
"We not only have a significant off-take partner in EDF Trading, who have
again strengthened their relationship with us, but we now also have a range
of significant resource focused funds and institutions that will join our
share register through the Placement and Convertible Note, all of which
have confirmed their intent to assist us as we execute our project
development plans.
"We are now fully funded to complete the acquisition of Mashala Resources
and meet our development plans over the next 12 months and importantly with
our balance sheet suitably strengthened to meet key objectives, most
notably, the Penumbra Project." Mr Turvey added.
Continental has retained full flexibility in its financing options for its
various assets moving forward, with no hedging required at Penumbra and the
company significantly reducing its reliance on its previously planned
project financing for the Penumbra Project.
Background to Mashala Acquisition
Under the terms of Share Sale Agreements executed on 15 September 2010 by
CCL and Mashalas shareholders, CCL will acquire a 64.1% shareholding in
Mashala for a cash payment of US$35 million.
The balance is to be acquired
on the same pro rata terms within 12 months of settlement date with the
option of settling in equity at a VWAP at the time of deferred settlement.
The acquisition of Mashala provides Continental with export coal production
from the Ferreira open cast mine which exported approximately 600,000
tonnes in FY 2009.
In addition Mashala also has Richards Bay Coal Terminal
(RBCT) allocation and Transnet Freight Rail contracts in place, enhancing
the Companys key logistics capabilities.
Mashala has a 300tph wash plant operation and rail siding only 3km from the
existing Ferreira open cast mine and Penumbra underground project, where
Continental is looking to immediately commence works designed to develop
this project into a 500,000tpa export thermal coal operation.
Continental is forecast to achieve its first export thermal coal sales from
the Ferreira open cast mine in the first weeks of November 2010 and is
forecasting almost 2 full months of export coal sales for the December 2010
quarter.
All conditions precedent in relation to this transaction have now been met
and the Company is now fully funded to allow settlement to occur in October
2010.
Convertible Note
Continental has finalised a A$10 million Convertible Note facility with a
range of Asian and European based financial institutions.
The Convertible
Note facility has been completed on the same terms as those previously
approved by Shareholders.
It will have a three (3) year term, a 10% coupon
rate and is to be convertible into fully paid ordinary shares at A$0.08 per
share.
Equity Placement
Continental is pleased to announce it has successfully completed a
Placement of 475,950,000 new shares at an issue price of A$0.064 per share
to raise US$30 million (before issue costs).
The Company received very
strong support for the placement which was oversubscribed.
The placement
shares will be issued in two tranches:
* 200,000,000 immediately under the Companys existing 15% capacity; and
* 275,950,000 upon shareholder approval at the Companys general meeting to
be held on 19 November 2010
The majority of the shares have been placed with institutional investors
and a number of resource focused funds in Europe and South East Asia and
the remainder of the shares have been placed with investors in Australia.
Renaissance Capital has acted as sole-bookrunner for the Placement to
investors outside Australia only.
Renaissance Capital (rencap.com) is a
leading investment bank focused on the emerging markets of Russia, Eastern
Europe, Central Asia and sub-Saharan Africa.
The Firm also offers its
clients access to these markets through financial centers such as London,
New York and Hong Kong.
Renaissance Capital has market-leading positions in
each of its core businesses -- M&A, equity and debt capital markets,
securities sales and trading, research, and derivatives.
The Firm is
building market-leading practices across emerging markets globally in
metals & mining, oil & gas and agriculture.
Renaissance Capital is part of
the Renaissance Group.
Renaissance Capital, also won the 2010 Investment Bank of the Year award
from African Banker magazine on 13 October 2010.
The second industry
accolade Renaissance Capital has received in Africa in recent weeks
following its receipt of the 2010 Best Africa Investment Bank award from
Africa Investor magazine (Ai) in September 2010.
With offices in South
Africa, Nigeria, Kenya, Zambia and Ghana and over 100 professionals working
on the continent, Renaissance Capital is one of the most active dealmakers
in Africa.
Renaissance Capital also has one of the largest and diversified
research teams in Africa.
Off-take agreement with EDF Trading and agreement for US$20 million
draw-down
EDF Trading is a leader in the international wholesale energy markets and a
wholly owned subsidiary of EDF S.A., a leading player in the energy
industry.On 22 July 2010 Continental and EDF Trading entered into a US$20
million financing facility and off-take agreements Project X, Vaalbank and
Vlakvarkfontein mines for a period of 20 years, at the internationally
recognised benchmark price for coal exported out of South Africas Richards
Bay Coal Terminal -- API4.
As a further strengthening of the relationship with EDF Trading,
Continental has entered into, on the same terms as previous agreements,
off-take agreements relating to its production of export thermal coal from
the Ferreira, Penumbra and De Wittekrans coal mines.
Sales of export
thermal coal under this off-take agreement from the Ferreira mine are to
commence immediately.
In addition, Continental has reached agreement with EDF Trading for the
advance of US$20 million from the already documented facility, with US$15
million to be drawn on completion of the Mashala acquisition and balance on
satisfaction of certain milestones.
Drawdown is expected to occur prior to
31 October 2010.
Ends
To download a full copy of the ASX Announcement please click here:
http://esp.gewru.com/em/message/email/view.php?id=729312&u=15636
For further information:
Peter Landau, Non Executive Director,
Continental Coal Limited
Ph: 08 9488 5220
David Tasker,
Professional Public Relations,
Ph: 08 9388 0944 / 0433 112 936
Em:
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