Cuesta Coal receives Chinese backing
Beijing Guoli Energy (BGE), the major shareholder of Cuesta Coal, will increase its stake in the Australian coal company from 36% to 54%. This will see BGE inject AU$ 15 million into the company via two separate share placements.
The move is the latest in a series of Chinese investments in the Australian resources sector.
Cuesta Coal said it was pleased with the value of the deal, as it noted that an issue price of 10.3 cents/share represented a premium to the last traded price.
The funds will be put towards advancing the definitive feasibility study for the Moorlands coal project, as well as repaying an AU$ 5 million convertible note liability associated with the acquisition of the Orion coal project (EPCs 775 and 776 contained in the Moorlands project) in 2012.
BGE’s subsidiary, Longluck Investment, will place AU$ 8.5 million into Cuesta via the issue of approximately 82.5 million new ordinary shares. This will be followed three months later with a further placement of AU$ 6.5 million via the issue of approximately 63.1 million new ordinary shares.
Both placements are subject to Cuesta shareholder and various regulatory approvals. Cuesta will look to hold an extraordinary general meeting of shareholders in late July this year, in which an independent expert will release a report opining on whether the placement is fair and reasonable and in the best interests of the non-associated shareholders of Cuesta.
Cuesta Coal’s managing director, Matthew Crawford, commented: “The funding agreement announced today with Beijing Guioli significantly strengthens the company’s balance sheet and allows us to continue to work towards achieving development objectives at Moorlands, in particular the operational focus on advancing the definitive feasibility study. This is particularly pleasing given the challenging market conditions currently faced by emerging coal companies and the limited availability of funding.”
“BGE’s total investment in Cuesta will be AU$ 47 million. In addition the continued support of BGE will increase the likelihood of securing favourable project finance funding for the construction phase of Moorlands,” Crawford added.
Written by Sam Dodson
Read the article online at: https://www.worldcoal.com/coal/22052014/cuesta_coal_receives_chinese_backing_881/
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