JOHANNESBURG (miningweekly.com) – Local coal explorer Waterberg Coal Company (WCC) on Monday reported that it was still in talks with AME International to assist in the recapitalisation of the company’s balance sheet and for the provision of working capital for advancing the Waterberg coal project, in Limpopo.
The two parties started discussions in March and AME has now advised WCC that, as part of the process, it has entered into a term sheet with South African-registered company Sekoko Coal, which holds the prospecting and mining rights of the Waterberg project.
The term sheet is for a proposed share subscription in Sekoko, with a view of AME acquiring a 20% interest in Sekoko.
The company, through its wholly owned subsidiary Ariona, has a 25% shareholding in Sekoko, which ultimately reflects a 10% interest in the Waterberg project.
WCC further said that legal documentation and conditions precedent were still under construction.
The funding accruing from the subscription is necessary to fund the operational requirements of the Waterberg project and its creditors. Further delays in completing the refinancing of Sekoko may necessitate that it apply for voluntary business rescue to enable it to continue with the restructuring and/or refinancing.
The company is in discussions with existing shareholders and investors with a view of concluding a short-term bridging loan until the recapitalisation is complete.
Given that the see-through interest in the assets is effectively the company’s major asset and, therefore, material to its future success, failure to avert business rescue for Sekoko may have similar flow on ramifications for the company itself.
WCC’s shares on the ASX and JSE remains suspended until the outcome of the recapitlisation has been finalised.
Meanwhile, WCC also reported that it would sell its EL5221 and EL5758 exploration tenements in the Gawler Craton region of South Australia.
These tenements are not considered core to its future business prospects and expressions of interest from potential buyers continues to be sought.