JOHANNESBURG (miningweekly.com) – London-listed Beacon Hill Resources is confident of securing additional financing for its Minas Moatize coal project, in Mozambique, after receiving a nonbinding proposal for export finance senior debt on the basis of an agreed term sheet.

The company expected to obtain a binding and definitive financing offer for Phase 2B and Phase 2C of its wash plant expansion during the first quarter of 2014, after the conclusion of due diligence and internal approvals.

The funding would likely take place in the second quarter of 2014, Beacon Hill CEO Rowan Karstel said on Friday.

Beacon Hill, which reported a cash position of about $8.6-million as at December, had no plans to dip into the currently undrawn Darwin standby facilities at the current share price, which stood at £0.83 by 10:30 on Friday.

The new facility would refinance the senior secured $10-million debt facility with Vitol Coal SA, in addition to providing capital financing to start implementing the expansion’s Phase 2B and 2C plant long lead items, which were expected to be completed by January 2015.

Karstel attributed the delay, from the fourth quarter of 2013, in securing financing to increased concerns around the current coal market, which resulted in “a much higher diligence threshold to achieve senior debt where only the most financially robust projects are capable of achieving funding”.

“The board remains confident that a facility will be obtained as the independent due diligence completed, to date, clearly confirms Minas Moatize is a very high quality project that has reached a bankable standard,” he added.

The group suspended its operations mid-November owing to coking coal prices being at record lows and negative cash burn and narrowed focus on the development of Phase 2B and 2C of the wash plant expansion.

The expansion was expected to propel the Minas Moatize mine from a Tier 2/3 to a Tier 1 asset.

During the quarter to December, the company’s mining operations were focused on the lower Upper Chipanga pit, where the group continued to expand production.

Beacon Hill mined about 18 855 t of run-of-mine coal, producing 11 555 t of saleable coal from the mine's existing wash plant.