23rd Jun 2014 08:04
LONDON (Alliance News) - Beacon Hill Resources PLC shares dropped on Monday as the company announced a share placing to raise GBP1.5 million, in order to settle outstanding payments, and despite saying that it continues to expects funding for the expansion of its Minas Moatize Coking Coal project to be in place by the end of the third quarter.
Its shares fell 38% to 0.435 pence, putting it among the top three AIM ALL-Share fallers during early trading on Monday.
The steel and coal production company, which operates the Minas Moatize mine in Mozambique, said it has entered conditional agreements to place up to 600 million shares in the company at a discounted price of 0.25 pence per share to raise roughly GBP1.5 million with institutional investors, including Novum Securities Ltd.
The company said GBP745,000 of the total funds raised will be used to refinance the final settlement of amounts it owes to Darwin Strategic Ltd, as part of a loan note entered into during October 2013, and the balance will be used for general working capital purposes.
It added that the placing will be completed in a set of tranches, with the first tranche being conditional upon the passing of resolutions at its annual general meeting on Monday, before being issued on Thursday.
Beacon Hill said it is also awaiting a payment of GBP1.1 million in VAT refunds shortly, which along with its existing cash and the placing cash, will provide adequate working capital until the end of the third quarter, when it expects to complete expansion project funding for the Minas Moatize site.
The company said further progress has been made to conclude financial due diligence for the expansion and discussions are continuing with its off-taker to update an offtake contract entered into in early 2011 to the satisfaction of the senior debt lender.
It said debt financial due diligence is expected to be imminently completed, and the final approval process including legal documentation should start shortly after.
Beacon Hill said in May that it expected 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.
"We expect to complete our debt financial due diligence within a month and to seek final relevant approvals shortly thereafter. We remain focused on starting construction of the Minas Moatize expansion project by the end of the third quarter 2014 and look forward to providing further updates regarding our progress," Chief Executive Rowan Karstel said in a statement.
The company added that a number of strategic investors have expressed interest in the possibility of acquiring a stake in the company or the Minas Moatize Coking Coal project, and it is currently considering its options.
By Tom McIvor; [email protected]; @TomMcIvor1
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