PERTH (miningweekly.com) – Coal developer Paringa Resources has secured a five-year $20-million debt facility from Macquarie Bank to develop its Poplar Grove mine, in Western Kentucky’s Illinois basin.
The loan facility includes a floating interest rate comprising the three-month London Interbank Offered Rate plus a margin of 10.5% a year during construction, falling to a 9.5% margin for the remainder of the loan term.
The facility can be repaid at the end of any quarterly interest period throughout the term of the loan, without penalty.
In consideration for this underwritten offer, Paringa will issue Macquarie with 4.4-million options, with an exercise price of 66c each, which is a 20% premium to the 30-day volume weighted average price of the company’s shares. The options will have a four-year expiry date.
A further 4.4-million options will be issued on the same terms, upon drawdown.
Macquarie will also provide a $1.7-million letter of credit facility to allow Paringa to collateralise environmental and other bonding obligations required for the construction and operation of the Poplar Grove mine.
Paringa noted on Wednesday that the provision of the facilities was subject to the execution of formal documentation, as well as the satisfaction of a number of conditions precedent. It is anticipated that the loan facility will be drawn down in 2018, only after incurring the project equity requirement in developing Poplar Grove.
A recently expanded bankable feasibility study into the Poplar Grove mine estimated that for a capital investment of $44.7-million, the Poplar Grove mine could be developed into a 2.8-million-tonne-a-year operation, with all-in operating capital estimated at $29.24/t.
The project is expected to have a mine life of 25 years and will deliver average yearly earnings before interest, taxes, deprecation and amortisation of $67-million.