JOHANNESBURG (miningweekly.com) – Aim-listed Beacon Hill Resources has updated its financing arrangements and restructured its debt in an attempt to strengthen and de-risk its balance sheet to provide a more solid foundation for future growth as it targeted more economic and competitive coking coal production from 2016 onwards.
The company said it had agreed a conditional subscription to raise up to £1.5-million, which would provide sufficient working capital for the group until the end of 2015.
Further, commitments had been received to convert or postpone the maturity of $13.2-million in convertible loan notes, which would significantly de-risk the group’s balance sheet.
“Reaching [the] agreement to convert the majority of the outstanding convertible loan notes into equity is a significant step forward for Beacon Hill as it seeks to establish a financially robust and stable foundation for its future growth.
“The rationalisation of our existing unsustainable debt structure, which has been achieved through the welcome support of our key stakeholders, including our existing senior debt provider and noteholder, Vitol Coal SA, will substantially strengthen the company’s balance sheet as we endeavour to secure both the new $20-million senior debt facility from the direct finance institution and additional equity funding required to proceed with the development of Minas Moatize [in Tete, Mozambique,] into a Tier 1 cash cost coking coal project,” Beacon Hill CEO Rowan Karstel commented.
Beacon Hill noted that the proposed $20-million new senior debt facility was at an advanced stage of negotiation, in addition to which it intended to raise $14.5-million of new equity in the first quarter of 2015.
"We are cognisant of the fact that these proposals will result in significant dilution for the company's existing shareholders. However, in light of the continuing depressed market conditions for coking coal and [the] ongoing suspension of our mining operations, we believe that such measures are essential to ensure the company's survival as we seek to secure the further financing to enable us to deliver on our washplant expansion project and resume more economic and competitive production in 2016,” Karstel explained.