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PERTH (miningweekly.com) – Dual-listed coal developer Coalspur on Monday announced that it would use the remainder of this year, and part of next year, to conduct a strategic review of funding options for its Vista project, in Canada.
The review would consider alternatives such as securing full funding for the project, the sale of all or a portion of the company’s assets, the formation of a joint venture, a possible merger or the outright sale of the entire company.
Refinancing and recapitalisation would also be investigated.
At the end of May, Coalspur expressed concern over its ability to develop the Vista project, as the depressed coal price environment affected the company’s ability to raise sufficient capital.
The company told shareholders that a special committee of the board of directors would oversee the strategic review, the results of which would only be made public once the board of directors have approved a specific transaction, or determined that disclosure was necessary.
Meanwhile, Coalspur on Monday also announced that its current financier EIG Global Energy Partners had determined that the final size of its overall debt facility would be $175-million.
However, Coalspur president and CEO Gill Winckler pointed out that the facility would not be sufficient to fully fund the Vista project in the current thermal coal market, and as a result, the company would repay its current debt with EIG before the end of March next year.
“When the EIG facility was executed in April 2013, the market conditions were such that a facility of up to $350-million was attractive for the development of Vista. Continued softness in thermal coal markets has clearly had an impact on the whole industry and on the amount of the project funding EIG can support at this point in time,” Winckler said.
Coalspur recently drew down an additional $10-million in funding through its existing senior debt facility with EIG, allowing the company working capital to progress Vista and to initiate the strategic review.
The additional funds would be used to secure the final licences and permits for Phase 1 of the Vista project, and finalising the engineering, procurement and construction contract, as well as entering into a five-year mining contract with project house Thiess.
The funds would also be used to advance key elements of work around Phase 2 of the project.
Phase 1 of the Vista development, in the Hinton region of Alberta, would involve the construction and commissioning of a six-million-tonne-a-year thermal coal facility with the capacity to expand to 12-million tonnes a year.