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Proposed Variation and Conversion of approximately US$13 million of Convertible Loan Notes, Up to £1.5 million Fundraising, Share Capital Reorganisation and Notice of General Meeting
Beacon Hill, the coking coal developer focused on the Minas Moatize Coking Coal Mine in Tete, Mozambique, has announced an update on its financing arrangements and the restructuring of its existing debt, aimed “at significantly strengthening and de-risking the Group’s balance sheet”, in order to provide a more solid foundation for future growth as it targets the recommencement of more economic and competitive coking coal production in 2016.
Highlights:
· Conditional subscription agreed to raise up to £1.5 million (US$2.3 million) gross to provide sufficient working capital for the Group until the end of Q1 2015
· Commitments received to convert or postpone the maturity of US$13.2 million in convertible loan notes thereby significantly de-risking the Group’s balance sheet
· Capital reorganisation which includes, inter alia, a one for 1,000 share consolidation, to facilitate the proposals and future funding activities
· Proposed new senior debt facility of US$20 million at an advanced stage of negotiation
· Intention to raise approximately a further US$14.5 million of new equity in Q1 2015, alongside the restructuring of the existing senior debt facility and introduction of the proposed new DFI facility, to fund the Minas Moatize expansion project
· Assuming successful completion of these initial proposals and the remaining funding objectives, the Company is targeting re-commencement of more economic and competitive coking coal production in 2016, at a Tier 1 cash cost, following completion of the planned Minas Moatize expansion project
Rowan Karstel, CEO of Beacon Hill, commented:
“Reaching agreement to convert the majority of the outstanding convertible loan notes into equity is a significant step forward for Beacon Hill as it seeks to establish a financially robust and stable foundation for its future growth. The rationalisation of our existing unsustainable debt structure, which has been achieved through the welcome support of our key stakeholders, including our existing senior debt provider and noteholder, Vitol Coal S.A., will substantially strengthen the Company’s balance sheet as we endeavour to secure both the new US$20 million senior debt facility from the DFI and additional equity funding required to proceed with the development of Minas Moatize into a Tier 1 cash cost coking coal project.
“We are cognisant of the fact that these proposals will result in significant dilution for the Company’s existing shareholders. However, in light of the continuing depressed market conditions for coking coal and ongoing suspension of our mining operations, we believe that such measures are essential to ensure the Company’s survival as we seek to secure the further financing to enable us to deliver on our washplant expansion project and resume more economic and competitive production in 2016.”
