PERTH (miningweekly.com) – ASX-listed Allegiance Coal will raise A$30-million through a share placement to institutional and professional investors to fund the acquisition of the Short Creek mine, in Alabama, and to bring the project into production.
Allegiance on Thursday announced that it had entered into an agreement with Drummond Coal to acquire the Short Creek mine for $4.4-million in cash and $11.5-million to replace the reclamation bond with the state of Alabama.
“Short Creek is a tier one asset, it has scale, exceptional coal quality, and provides Allegiance with a long life mine delivering premium CSR coking coal to the seaborne market,” said Allegiance chairperson and CEO Mark Gray.
“The acquisition positions Allegiance alongside the major producers of high quality hard coking coal in the Black Warrior basin including Peabody, Warrior Met and Javelin Commodities. It both complements and consolidates our investment in Alabama coking coal and sets a pathway to Allegiance becoming a producer of a variety of US coking coals from New Elk, Black Warrior and now Short Creek.”
Allegiance has appointed an independent contractor to deliver a Joint Ore Reserves Committee-compliant resouce for the Newcastle, Mary Lee and Blue Creek coal seams within the Short Creek operation, and this is due by late November.
To fund the acquisition, Allegiance on Thursday announced a two-tranche share placement, priced at 50c a share.
About 23.5-million shares and 796 268 lead manager options will be issued under the company’s existing placement capacity, to raise an initial A$11.8-million, while the second tranche of 36.4-million shares and more than 1-million lead manager shares will be issued subject to shareholder approval at the company’s annual general meeting.
The fund will be used to finance the acquisition of the Short Creek mine, as well as the replacement of the reclamation bond, along with about A$8.3-million in working capital.