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Elitheni Coal short-term debt facility discussions at advanced stage

28th October 2013

By: Leandi Kolver

Creamer Media Deputy Editor

  

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JOHANNESBURG (miningweekly.com) – Discussions regarding a short-term debt facility that would enable Aim-listed Strategic Natural Resources’ (SNR’s) 74%-owned subsidiary Elitheni Coal to pay its creditors, were expected to be completed by the end of the week, SNR said on Monday.

The company explained that the board of Elitheni was at an advanced stage of discussions with a number of experienced coal mining parties in South Africa regarding a short-term capital injection into Elitheni, by way of debt, which would be potentially convertible into Elitheni shares.

"The depressed international coal price has been a real barrier to securing strategic funding in a timely manner but I am encouraged by recent market improvements, which are helpful.

“The board remains focused on the strategic value of the mine, which represents a very large resource, excellent infrastructure access, the real possibility of a coal-fired power station in the Eastern Cape and strong support of both the provincial and national governments of South Africa," SNR CEO Gabriel Ruhan said.

Should the discussions regarding a short-term capital injection into Elitheni not prove to be successful and, in the absence of alternative financing being secured in the short term, the board of Elitheni would have to review its options, with a view to increasing the value of the Elitheni assets, which may include a slowing down of operations at the mine until such alternative financing becomes available.

Meanwhile, discussions were also ongoing regarding a more permanent recapitalisation of the Elitheni business.

“The board also understands that both the short and longer term debt facilities currently under discussion will likely be converted into new ordinary shares in Elitheni, resulting in a dilution of the company's equity interest,” the company said.

Edited by Chanel de Bruyn
Creamer Media Online Managing Editor

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