Subsequent to the transaction’s closure, subject to shareholder approval, Avexa will aid the mine’s development along with the additional A$5.82m ($6m) loan offered to Coal Holdings.
The existing underground mine will soon be re-opened to generate coking or metallurgical coal.
Funding will contribute to the purchase of equipment and machinery in addition to working capital requirements and transaction costs during operations.
The mine is projected to generate $85m annually from the production of 660,000t of coal at full production.
Avexa chairman Iain Kirkwood said that production costs are budgeted at US$50/ton.
"The base case metallurgical coal selling price of US$130/ton is expected to generate US$85 million a year gross," Kirkwood added.
"Earnings before interest and tax is expected to be US$50 million a year. Avexa’s 25.5% share will earn US$12.5 million pre-tax each year or US$8.1 million after tax for the 15-year life of the mine based on these assumptions.
"Avexa’s US$6 million loan should be repaid out of the first year’s cash flow."
