1st Jul 2014 09:58
LONDON (Alliance News) - Strategic Natural Resources PLC Tuesday said it has started a strategic review of its Elitheni Coal mine asset in South Africa, and it has also received an offer for further investment of GBP1.2 million, helping to pay off its creditors.
The natural resources development company, which is currently struggling to make necessary payments to creditors, said it is seeking offers for the site that are in the best interest of shareholders, creditors and its partners.
The Elitheni asset has 266 trillion tonnes of coal and is connected to extensive infrastructure, so it hopes to achieve a strong offer for the site.
The company said that, as part of its review of activities, it has bought a 6% shareholding in Millennium Energy Corp for GBP400,000 in cash and GBP2 million in shares, issued at 5 pence per share.
Strategic Natural entered the share purchase agreement in May and subsequently made two deposit payments totalling GBP660,000 as part of the deal.
The company noted that it should have announced the share purchase deal in May under AIM rules for companies, but it failed to do so because it believed that the deal should not be announced until certain conditions had been met.
Strategic Natural said its nominated adviser Allenby Capital Ltd has resigned from its role due to the failed announcement.
The company, which owns 74% of the Elitheni Coal Ltd operations in South Africa, earlier this year got into financial difficulty and started to receive demands from creditors for payments it couldn't afford to make. Elitheni faced being put into liquidation because of the issues.
In May, the company said it had secured an investment of GBP1.5 million in the company, which it would use to pay off at least one creditor,
On Tuesday, Strategic Natural said it has provided GBP230,000 to Elitheni since May 14, which has been used to pay ZAR2.3 million to creditors and to pay salaries and operating expenses at the company.
The company said the GBP1.5 million payment did not allow it to clear all of its creditors, but it did pay back the most critical creditor payments, including London commodity Brokers, which had filed a winding-up petition for the company based on the disputes. London Commodity Brokers has since dismissed the petition.
On Tuesday, Strategic Natural also said that due partly to its decision to invest in Millennium Energy, it has now received a further subscription offer from Target Alliance Ltd for GBP1.2 million at 3 pence per share.
The company said the offer was conditional upon its share trading suspension being lifted and shareholder approval, which it expects to receive once a new nominated adviser is appointed.
The firm said the proceeds of the subscription will be used to further pay creditors and meet its working capital needs.
Strategic Natural shares remain suspended at 2.88 pence on Tuesday.
By Tom McIvor; [email protected]; @TomMcIvor1
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