JOHANNESBURG (miningweekly.com) – Aim-listed Beacon Hill Resources was prioritising the final approvals for a proposed $20-million in senior debt, to be used to expand its Minas Moatize wash plant, in Mozambique, to 3.2-million tons a year from the current 1.8-million tons a year.

The company on Tuesday said that, while the senior debt approval decision had been delayed, as a result of circumstances beyond Beacon Hill’s control, it was still expected within the third quarter of the year.

Final credit approval was also expected during this period subject to implementation of the rolling stock sublease and any other final conditions imposed by the new senior lender.

“The board of Beacon Hill remains committed to achieve drawdown of the facility during the fourth quarter of 2014,” the company stated.

Beacon Hill further announced that an amended offtake agreement with its coal offtaker Global Minerals had now been executed and submitted in support of the $20-million senior debt facility.

In addition, the company noted that it had entered into strategic discussions with a view to obtain a proposal for an equity investment in Beacon Hill, stating, however, that these discussions would likely remain at an early stage until the final senior debt approvals had been obtained.

Meanwhile, Beacon Hill also pointed out that its wholly owned subsidiaries BHR Mining Mauritius and BHR Coal had agreed a further amendment agreement with Vitol South Africa (SA) related to the $10-million senior debt facility provided to the subsidiaries.

“Under the terms of the amendment agreement, Vitol SA has agreed to defer all principal amortisation and accrue interest until September 30, 2014. The amendments are supportive to maintaining Beacon Hill's liquidity and cash flow and the board of Beacon Hill is optimistic that this will permit sufficient time for the new senior debt to be arranged and any restructuring of existing debt to take place,” the company stated.

Further, Beacon Hill announced that Minas Moatize expected to complete the conditions precedent to enter into a minimum 12-month rolling stock sublease for its entire rail fleet of five locomotives and 89 wagons, on the Sena railway line, between the Tete coal basin and the Port of Beira.

Minas Moatize had also recently received a value-added tax refund payment totalling about $1.4-million from the Mozambique government.

“After payment of unbudgeted customs tariffs and penalties, Beacon Hill retains $1.8-million in cash net of recent fundraising. The board of Beacon Hill may seek to raise additional working capital to ensure it remains adequately capitalised and this will likely be a condition precedent of any new senior debt financing approval,” Beacon Hill said.

The company would release its 2014 interim results during September.