9th Oct 2014 10:32
LONDON (Alliance News) - Beacon Hill Resources PLC Thursday said it has sub-let its five locomotives and 90 rail wagons on the Sena Line in Mozambique, a move that will support its efforts to improve the economics of its Minas Moatize coking coal project as it expands it.
In a statement, the company said the minimum lease term under the agreement is 12 months, with an option to extend. It will increase usage of the Sena Line by up to 500,000 tonnes a year.
Beacon Hill is trying to advance its Minas Moatize coking coal project to so-called Tier One cash cost status, meaning it will have an economically robust mining project even during periods of depressed coking coal prices.
The coal company is not anticipating any production in the second-half as the Minas Moatize project is in care and maintenance until the construction of the expanded washplant is completed. The company intends to re-start production in late 2015 or early 2016.
It had previously said it would sub-lease its rolling stock, pending the upgrade of the Minas Moatize coking coal mine to a Tier 1 cash cost producer and the re-start of export operations through the Port of Beira.
"We are delighted to have secured a high calibre counterparty to lease our rolling stock on the Sena Line further proving the viability of the logistics solution whilst Beacon Hill's Minas Moatize Coking Coal expansion project is advanced," Chief Executive Rowan Karstel said in a statement.
As it is not expecting any production in the second-half of the year, the company is focusing on securing a new USD20 million senior debt facility to fund its capital expenditure and restructuring its USD25 million in existing senior and sub-ordinated debt. It has also said it also look to raise new equity and working capital of up to USD17 million.
Beacon Hill Resources shares were up 12.0% at 0.140 pence Thursday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
Copyright 2014 Alliance News Limited. All Rights Reserved.