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Coal producer Xinergy completes placement financing

World Coal,

Xinergy Limited, a coal producer operating in the Central Appalachian basis, has announced the completion of a US$ 4.95 million non-brokered private placement financing through the sale of 11 million shares, at US$ 0.45 per share.


Company CEO, Bernie Mason, commented: "We are thrilled to announce today that we closed this financing. We told our investors on our last earnings call that the company was exploring many levers to use to strengthen our balance sheet. Today, we delivered the first of such lever."

In a November 2013 earnings call, Xinergy mentioned that it was pursuing multiple strategies to strengthen operating cash and liquidity. The equity raise is the first of such levers at the company's disposal. Other levers to strengthen the balance sheet are also currently being pursued. "The intention is for these additional levers to add more liquidity and strength to Xinergy, and in turn, positioned Xinergy to reap the benefits of a general market turnaround," Mason added.

Thermal coal prices

Xinergy believes that thermal coal prices will begin to gain momentum in late Q2 this year, as inventory levels have reduced to multi-year lows of 132 million t as of the end of January, 23% below the 5-year average, and the lowest levels since January 2006.

Estimates of inventories as low as 121 million t are expected at the end of February, when data is released. January coal consumption was up 11% at utilities, and coal-fired generation in the electric sector rose 14%, according to a Howard Weil report.

Metallurgical coal prices

Mason concluded: "Metallurgical coal pricing continues to be stagnant in 2014, and the company believes that this will give it a competitive edge as a low-cost producer. Low-cost producers always persevere in down troughs and thrive during market upturns. The company has also noticed a substantial increase in a flight to quality in the metallurgical marketplace, and South Fork's premium quality mid-vol metallurgical coal is the quality end users are looking for.”

Adapted from press release by Katie Woodward

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