JOHANNESBURG (miningweekly.com) – Keaton Energy has concluded a financing facility with Investec Bank, providing the South African coal junior with a R300-million term loan and a R50-million working capital facility.

The company said in a statement on Monday that R170-million of the term loan had been used to retire the remaining balance of the project finance facility advanced by Nedbank in 2011 for the construction of the Vanggatfontein coal washing plant and ancillary facilities in Mpumalanga.

Keaton CEO Mandi Glad said the company was pleased to have concluded this important financing at a time when Keaton was in a strong growth phase, noting that “the replacement of the Vanggatfontein project finance debt with a term loan provides us not only with greater financial flexibility within the Keaton group but also reduces our cost of capital”.

Further, Keaton noted that the remaining R130-million of the term loan was to be applied as part of the purchase consideration for ASX-Listed Xceed Resources, for which Keaton offered A$19.7-million in August.

The Federal Court of Australia on February 6 approved the scheme of arrangement under which Keaton would acquire all the issued shares in Xceed.

Xceed currently had an interest in three coal projects in South Africa, inamely the Moabsvelden, Roodepoort and Bankfontein projects, with a combined total resource of 114.4-million tonnes.

The junior's most advanced asset was its 74%-owned Moabsvelden, 3 km from Keaton’s Vanggatfontein colliery, and was set to start production in late 2014. The mine would primarily be a product operation for State-owned power utility Eskom with an export fraction, allowing Keaton to enter the export thermal coal market for the first time.

Glad said Keaton would conclude the Xceed acquisition on an all-cash basis as announced previously.

Meanwhile, the R50-million working capital facility was available for general purposes.

“The availability of a further R50-million facility, coupled with our growing cash reserves, positions Keaton to take advantage of any opportunities that may arise in the market,” Glad explained.