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Allegiance Coal to Acquire New Elk Hard Coking Coal Mine

Coal News - Published on Thu, 23 Jan 2020

Image Source: New Elk Coal
Allegiance Coal Limited has entered into a binding agreement with Cline Mining Corporation to acquire 100% of the ownership interests in New Elk Coal Company LLC, which company owns the New Elk hard coking coal mine located in southeast Colorado in US. The Mine is fully built, is permitted, and subject to refurbishment of mining equipment and minor mine-site rehabilitation, is production ready. In consideration, Allegiance will pay Cline a purchase price of USD 1 and arrange an Initial Debt Repayment to Cline on closing the Acquisition comprising USD 5 million in cash to replace the State of Colorado reclamation bonds relating to the Mine, USD 3 million in cash and USD 3 million in Allegiance shares.

Following the Initial Debt Repayment, there will remain in NECC approximately USD 30 million of debt owing to Cline, which will be repaid by Cline receiving 60% of NECC's retained earnings after NECC makes prudent provision for any preferred debt payments and obligations, and sustaining and working capital, until the Cline Loan is paid in full. The Cline Loan is interest free, has a term of 10 years, and is secured against the assets of NECC. The Cline Loan will subordinate to a maximum of USD 40 million of preferred debt. The Acquisition is conditional only on Allegiance raising the Mine start-up capital which must occur prior to 15 July 2020, during which period Allegiance will continue to pay USD 150,000 per month toward Mine care and maintenance.

Subject to raising the start-up capital and completing the Acquisition, the planned date for commencement of production is early calendar Q3 2020.

Source :

Posted By : Arun Huidrom on Thu, 23 Jan 2020
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