ASX-listed coal developer Hodges Resources has secured up to $1-million in funds to progress development studies at its flagship 75%-owned Morupule South coal project, south of the Morupule colliery, in Botswana.
The funding arrangement comprises a $1-million standby subscription agree- ment from Melbourne-based investment company Gurney Capital Nominees, to be drawn upon when required by the company.
The agreement will enable Hodges Resources to keep progressing its pre- feasibility studies at the project to advance to feasibility phase, says Hodges Resources MD Mark Major.
The funding facility can be drawn on by one or more drawdowns by Hodges Resources at any time within the next five years, but the company does not have to use the facility. Hodges Resources also has the right to terminate the funding facility at no cost.
Under the standby subscription agree- ment, Gurney Capital Nominees agrees to subscribe for shares, if requested by Hodges Resources, subject to the terms and conditions of the agreement, says Major.
If the facility is drawn on, Hodges Resources will have to issue shares to Gurney Capital Nominees. “The amount of shares will be calculated based on the value of 80% of a five-day weighted average share price,” he notes.
The company’s Morupule South coal project yields over two-billion tons a year of thermal coal resource.
The company also expects to upgrade this resource estimate before the end of the year.