ASX-listed Universal Coal has secured the funds needed to complete the development of its New Clydesdale colliery (NCC), in Witbank, Mpumalanga.

The coal miner last week announced that a R525-million senior secured debt finance facility had been sourced from Investec Bank, enabling the South Africa-focused miner to progress the mine development programme of its second mining operation.

The first phase of the NCC project, which would produce two-million tons of coal a year for high-end domestic markets over an initial ten-year period, was scheduled to be fully commissioned later this year, Universal said in an update to the market last week.

“By securing corporate debt financing on more favourable terms than project financing, Universal’s net value will be significantly enhanced and its ability to bring long-life, multiproduct coal operations to full production demonstrated,” added CEO Tony Weber.

Following the completion of the project, the facility’s interest rates would be reduced from the Investec-levied three-month Johannesburg interbank agreed rate (Jibar) plus a margin of 4% a year to the three-month Jibar plus a margin of 3.5% a year.

The first R285-million tranche, to be repaid in a quarterly cycle over 20 repayment periods, would be used to settle the current project finance facility.

Another R25-million, secured over a five-year tenor, had been allocated to the provision of working capital and the refinancing of debt for the company’s Kangala colliery, also in Mpumalanga.

The final R215-million tranche, which would benefit from a repayment holiday for the first 12 months, with 16 quarterly repayments to be made thereafter, would fund the balance of capital development activities at the NCC.

Access to the final balance would be dependent on favourable long-term coal sales agreements (CSAs), the negotiations of which were advancing with both domestic power and metallurgical offtakers.

Universal had also concluded a bankable feasibility study for the initial phase of the NCC, while the project’s development was set to continue as scheduled, with on-site mining activities to start once the CSAs had been concluded.

Further, Universal expected the Section 11 Ministerial approvals to be granted early during the next quarter, pending certain rectifications required by the Department of Mineral Resources.