South African coal company Keaton Energy has finalised with international specialist banking and asset management group, Investec on the acquisition of a term loan of R300 million ($27m) and a working capital loan of R50 million ($4.5m).
The JSE-listed miner stated that it plans on using R170 million ($15.3m) of the term loan to offset the balance of the construction of the Vanggatfontein coal project washing plant and auxiliary facilities that was advanced by Nedbank in 2011 while the balance of R130 million ($11.7m) will be used to acquire Xceed Resources Limited.
The remaining R50 million ($4.5m) is to be used for the day-to-day trading operations of the company and general purposes.
“We are pleased to have concluded this important financing at a time when Keaton is in a strong growth phase. We will conclude the Xceed acquisition on an all-cash basis as announced previously and, importantly, the replacement of the Vanggatfontein project finance debt with a term loan provides us not only with greater financial flexibility within the Keaton group but also reduces our cost of capital,” Keaton’s CEO, Mandi Glad, said.
The mining company, which has a colliery in Vanggatfontein, aims to sell five million tons annually by 2017 with the intention of becoming a mid-tier coal miner in the long run. This spurred the acquisition of Xceed, an Australian company with a total of 114.4-million tonnes in three coal projects in South Africa.
“Vanggatfontein continues to produce to plan both in terms of production and, importantly, cash generation. With the Xceed transaction due to close in early 2014, we look forward to developing another successful mine adjacent to Vanggatfontein and integrating the two mines into a significant, long-term operation,” Mandi said in a statement she gave in 2013.
The acquisition of Xceed’s Moabsvelden in an all-cash sale would be concluded by February 19 since the Australian Stock Exchange has approved it.
This will allow the company foray into thermal coal export for the first time since the mine’s primary operation is the production of high quality coal from Eskom, south Africa’s electricity public utility.
