WCC, Firestone shares suspended as financing negotiations continue
JOHANNESBURG (miningweekly.com) – The Waterberg Coal Company (WCC) and its subsidiary Firestone Energy have been granted voluntary suspensions in the trading of their shares on the ASX and the JSE, pending the outcome of funding negotiations.
WCC told shareholders earlier this week that Standard Bank South Africa was seeking repayment of A$43-million in terms of a convertible secured facility entered into in March 2013, by April 9.
WCC said it had continued negotiations with banks and funding agencies to secure the funding required to retire this debt and to provide working capital for a standalone export project, which formed part of the broader Waterberg Coal Project (WCP) being developed by Firestone and its empowerment partner Sekoko Coal.
WCC holds an interest in both Firestone and Sekoko.
The WCP would produce ten-million tonnes a year of coal for power utility Eskom; however, a coal supply agreement had yet to be signed.
WCC was also considering options for a standalone export project, located in the south of the WCP area. WCC believed this project could be brought into production and cash flow sooner than the larger WCP.
The export project was aimed at producing four-million tonnes a year of saleable product over a six-year period. Subject to the completion of satisfactory funding arrangements, the export project was now scheduled to start producing in the third quarter of 2016, a quarter later than initially expected.
“The lead manager of the proposed banking syndicate has commissioned an international mineral consultancy as its independent technical expert to produce a due diligence report for the purposes of credit committee approval and project funding,” WCC executive director and CEO Stephen Miller said in a statement this week.
As part of securing financing for the export project, the partners in the WCP had reached an in-principle agreement with an international power utility to be the sole offtaker of the export-quality coal. The signing of an offtake agreement was a condition precedent for the drawdown of funding to be provided by the project financiers.
Further, the WCP partners had reached an in-principle agreement with an international mining and engineering, procurement and construction contractor to contribute funding to meet WCC’s working capital requirements.
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