28th May 2014 09:15
LONDON (Alliance News) - Beacon Hill Resources PLC Wednesday said it expects a decision on its planned USD20 million senior debt facility by June 30 so that it can begin drawing down the funds on September 1.
The steel and coal production company, which operates the Minas Moatize mine in Mozambique, said it is confident that agreement on the financing package to expand the operation will soon be completed.
The company said its current cash balance is USD3.8 million, with a creditor balance of USD2.8 million, and its cash burn has been reduced to roughly USD400,000 per month or less.
Beacon Hill said it has amended the terms of the debt facility so that it has additional headroom to benefit from both principal and interest payments during the whole second quarter and until July 31.
It also expects to be eligible in June for an additional USD1.1 million payment as a VAT refund from the Government of Mozambique, which along with the debt facility will be used to fund an increase in its washplant capacity at the coal mine to 2.8 million tonnes per year and improve cash resources.
The company said that its five locomotives, built to move its coal, are in Mozambique and ready for commissioning and all but one of its 90 coal wagons were given final acceptances for commissioning on March 26.
However, lower coking coal prices have hit the industry recently with hard coking coal spot prices falling to roughly USD120 a tonne on Tuesday from well over USD300 per tonne in 2011, according to the Australian Financial Review, and questions remain over the overall future profitability levels of coal operations.
"With more encouraging forecasts for coal being issued by many commodities analysts, and Beacon Hill working towards funding and commencing its Expansion Project, I remain confident that Beacon Hill will negotiate this difficult period successfully," Chief Executive Officer Rowan Karstel said in a statement.
Beacon Hill Resources shares were down 4.2% to 0.388 pence on Wednesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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