[miningmx.com] — COAL of Africa (CoAL) shares recovered marginally in early trading on the JSE on Thursday, after news that the company had secured a $50m loan facility from Deutsche Bank.
The shares rose 2% to 831c but remain close to the 12-month low of 755c set in November and to which the stock nearly dropped again during trading on Tuesday.
CoAL has been badly affected by severe environmental opposition to its Vele coking coal mine in Limpopo Province, which has been closed since August.
The closure of Vele plus operational problems at the group’s Mooiplaats mine in Mpumalanga and lower-than-expected export revenues had put CoAL’s finances under pressure.
CEO John Wallington said in January that the company was looking at various financing alternatives given – in particular – the need to repay a $20m loan from JP Morgan which fell due today, March 24.
Wallington said on Thursday the funds now available through the new facility “together with the company’s current cash balance of $31m as at March 18, provide CoAL with sufficient working capital to execute its operational strategy.
“Furthermore, the company is benefiting from improved cash flow as a result of higher thermal coal prices combined with the implementation of recent cost-cutting measures.’
The new loan is at an interest rate of LIBOR (London Interbank Offered Rate) plus 3% and will be available for up to 30 months.
The loan will be guaranteed by CoAL and two of its operating subsidiaries – NuCoal Mining and Woestalleen Colliery.
A key condition is that CoAL has undertaken that revenues from “certain offtake contracts’ will be paid into collection accounts held with – and pledged to – Deutsche Bank.
The amount in those collection accounts must always be equal to or greater than 130% of the outstanding amount on the loan facility.
