PERTH (miningweekly.com) – Coal miner Bowen Coking Coal has secured A$190-million in funding to fast-track the acquisitions of the Burton and Lenton projects, in Queensland.
Bowen at the end of December last year announced a binding sale and purchase agreement with fellow-listed coal miner New Hope Corporation to acquire New Lenton Coal, following a binding term sheet in August.
Under the terms of the agreement, Bowen will pay A$20-million upfront, as well as potential milestone and royalty payments up to a maximum value of A$77.5-million.
Bowen said at the time that the acquisition provided established infrastructure, replacement value of over A$300-million, a 64-million-tonne openpit resource at Burton and a 140-million-tonne openpit resource at New Lenton. The assets provide significant synergies being within close proximity of Broadmeadow East and Hillalong.
The miner on Tuesday told shareholders that it has now executed a $55-million secured corporate debt facility agreement with Taurus Mining Finance Fund No 2, primarily for rebuilding the Burton infrastructure.
The Taurus facility is intended to be utilised for capital expenditure, general working capital and expenses incurred in recommissioning the Burton coal handling and preparation plant, developing the Burton and Broadmeadow East projects and operating the Bluff mine. The Taurus facility is structured as an amortisable term loan comprising five equal quarterly repayments over its term of 18 months. The first principal payment is scheduled for December 2022.
Meanwhile, Bowen has also secured a A$70-million performance bonding facility agreement with New Hope Corporation, mainly to provide bonds under Queensland’s financial provisioning scheme.
Furthermore, Burton would issue an additional A$40-million unsecured convertible loan notes for working capital to fast-track steady-state production at Burton.
The notes are convertible into fully paid ordinary shares in Bowen and have a maturity of five years unless earlier redeemed or converted in accordance with their terms and conditions. Maturity of the notes will accelerate to July 15, 2022 in the event the acquisition of the Burton mine and Lenton project does not reach completion by July 5, 2022.
Bowen told shareholders that the new funding would enable the company to reach financial close on the Burton and Lenton project acquisitions, with financial close and drawdown expected by the end of June.
“We are absolutely delighted to announce the execution of new financing agreements that will unlock this transformational opportunity for Bowen Coking Coal. This allows us to complete the acquisition of the Burton Complex which is a foundation asset on our journey to build a significant mining company extracting high-quality coking coal in the Bowen basin, the world’s premier coking coal basin. The new funding is a clear demonstration of confidence in the company’s strategy and vision and we are excited to reach this significant milestone,” Bowen executive chairperson Nick Jorss said.
“We look forward to capitalising on this great opportunity to continue to create value for shareholders and welcome the opportunity to work with Taurus and New Hope as new funding providers.
“This has been an extremely complex transaction, some three years in the making, and I would like to personally acknowledge the fantastic efforts of the team at Bowen, our advisors, along with the goodwill of our incoming funding providers. Despite growing demand for steel for infrastructure and increasingly for the renewable transition, financing metallurgical coal projects is a market that has been abandoned by traditional lenders and significant barriers were overcome by the team in completing this transaction.
“With the opening of our operations this year and in current conditions, we expect to gain access to strong cash flows in a buoyant coking coal market which will help support further growth,” said Jorss.
“We believe that significant latent value exists in the attractive strip ratio coal at Burton/Lenton as well as the five-million-tonne-a-year wash plant, haul road, camp, train load out, and other infrastructure which unlock considerable synergies with our nearby projects. Completing the acquisition of these Burton assets cements our recent step up from junior explorer and underpins our goal of completing our transition into a significant supplier of coking coal to the steel industry worldwide for many years to come. We are also very pleased that as part of this transaction we have entered into a non-binding memorandum of understanding with the vendor, New Hope Corporation, to investigate further growth options in the sector.”