JOHANNESBURG (miningweekly.com) – JSE-listed Firestone Energy on Friday requested a month-long extension to its voluntary suspension to allow gold producer Sibanye Gold more time to undertake its due diligence and provide formal transaction documentation for the refinancing of parent Waterberg Coal Company (WCC).
The voluntary suspension, which had been in effect since March 19, was due to expire on September 21, with the parties requesting an extension until October 21, following Firestone and WCC’s nonbinding term sheet with Sibanye for the sale of WCC’s existing funding facility.
WCC had requested several extensions for the suspension of trading in its shares while it finalised a new funding arrangement to replace its overdue funding facility with Standard Bank, which allowed for more time during which the alternative funding negotiations could progress.
“Given that the conditions of the Sibanye refinancing of WCC have not been completed, Firestone is of the view that reinstatement of trading for its securities at this time is likely to be materially prejudicial to WCC’s ability to successfully complete the complex funding transaction contemplated, which is critical to Firestone’s financial viability,” Firestone said in a market update.
The company requested an extension until October 21 or until Sibanye’s completion of the due diligence and execution of the formal documentation.
Sibanye announced on Thursday that it planned to inject A$8.5-million of working capital into the cash-constrained WCC to develop its multiproduct Waterberg coal project, which would provide coal to advance Sibanye’s independent power producer (IPP) plans.
Mining Weekly earlier reported that the deal allowed Sibanye the right to a 51% shareholding in the group within 18 months of the deal closing and to enter into a coal offtake agreement to secure low-cost discard for its proposed IPP platform.
The proposed restructuring would result in the merging of WCC and Firestone, and Sibanye’s buying shares in the consolidated entity at A$0.0154 a share.