Australian Pacific Coal is set to restart operations at its Dartbrook thermal coal mine after the company secured a commitment for $50m debt financing from a major commodity trading firm.
Under the terms of the funding agreement, Australian Pacific Coal will receive a three-year debt financing with an interest rate consistent with current market conditions.
The mining and exploration company will retain its current 80% working interest in the Dartbrook Joint Venture (JV), along with global coal marketing rights for all Dartbrook products.
It can repay the loan through coal offtake with an ability for early repayment.
Australian Pacific Coal aims to conclude the loan documentation and initial drawdown of funds within four to six weeks, subject to final negotiations.
Australian Pacific Coal interim CEO Ayten Saridas said: “The receipt of a non-binding Letter of Intent for up to $50m debt funding from a highly credible global party in this tough capital market environment is a clear signal that the Dartbrook project presents an attractive and compelling investment for lenders and traders alike.
“Whilst we have had to rely on our own balance sheet to fund the restart activities to date, it has enabled us to significantly de-risk the project and reflects positively on our progress.
“In particular, the de-watering of the Hunter Tunnel has been successfully delivered safely and on time. We have completed the Operating Joint Venture Agreement and have developed a revised Mine Plan which will result in improved yield potential and better product mix.
Australian Pacific Coal previously announced that the project would require up to A$120m ($77m) in capital expenditure and working capital to recommence the mining operations.
It has offered around A$20m to the Dartbrook JV and requires an additional A$75m to fund equipment purchases, with initial working capital requirements estimated at A$20-A$25m.
The company said that its efforts to raise additional funds to support working capital requirements and reimbursement project loans are well advanced.
The Dartbrook underground coal mine is located in the Hunter Valley, New South Wales, Australia.
The non-binding letter of intent for $50m debt funding is adequate to fund the current estimated expenditure requirements of the project through to the first coal in Q4 of 2023.
Saridas added: “Thermal coal prices have recently rallied and this is an opportune time to be a new source of supply of NEWC spec coal into the export market.
“We are on track to commence mining operations in Q4 20231 and anticipate the first coal sales/shipments in Q1 2024. Whilst we still have much work to deliver on our plans, AQC and our JV partner, Tetra, remain focused on the restart of the Dartbrook Mine.”
