Mongolian coal miner, TerraCom, faces an uncertain future unless shareholders approve a AUS$7 million investment in the company by Chinese company, SPG Holdings, the board of directors has warned.
In a statement the company said it was strongly recommending shareholders back SPG’s investment, which would see the creation of 583.3 million new shares in the company at a price of AUS$.0.012, “in order to secure funds to ensure the company can continue to trade, implement its business plan and also maintain the support of financiers.”
SPG is part of a group of companies controlled by Chinese real-estate mogul, David Wang, chairman of Hong Kong-listed Greenland Hong Kong Holdings.
“It is the board’s view that [the SPG investment] should be seen as a significant and strategic opportunity for the company to secure a very large and well-connected Chinese group on the share register,” said Craig Wallace, Chairman of TerraCom’s Board of Directors, at the company’s Annual General Meeting last November.
“This will support the expansion of coking coal operations in Mongolia and in particular, through the expansion of the market for [the company’s] hard coking coal in China and through removing costs from the supply chain to Chinese end users.”
TerraCom operates the Baruun Noyon Uul (BNU) metallurgical coal mine in the South Gobi region of Mongolia. It is also developing two projects in Queensland, Australia: the Northern Galilee and Springsure thermal coal projects.
An Extraordinary General Meeting has been scheduled for 12 January to enable shareholders to vote of the SPG placement. Approval of the cash injection will allow the company to continue its efforts to negotiate a restructuring of its debt with its financiers, Noble Group and OCP, who have made the bringing in of fresh equity a pre-condition to successfully completing a deal.
The company is currently negotiating with its financial backers the issuing of a new US$115 million five-year interest-only bond which would give TerraCom “greater flexibility to manage its cash flows going forwards,” said the company.
Edited by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/coal/06012016/terracom-board-recommends-chinese-investment-2016-13/