REG - Bens Creek Group PLC - Coal sale to Avani Resources & operational update

Bens CreekAnnouncement

08/04/2024 07:00

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RNS Number : 5879J  Bens Creek Group PLC  08 April 2024

Prior to publication, certain information contained within this announcement
was deemed by the Company to constitute inside information for the purposes of
Regulation 11 of the Market Abuse (Amendment) (EU Exit) Regulations 2019/310.
With the publication of this announcement, this information is now considered
to be in the public domain.

 

8 April 2024

Bens Creek Group plc

("Bens Creek" or the "Company")

 

Coal sale to Avani Resources Pte Ltd, operational update and related party
transaction

 

Coal sale to Avani Resources Pte Ltd

 

Bens Creek Group plc (AIM:BEN), the owner of a metallurgical coal mine in
North America supplying the steel industry, announces that Bens Creek
Operations WV LLC ("BC Operations"), a wholly owned operating subsidiary of
the Company, has agreed (the "Agreement") with Avani Resources Pte Ltd
("Avani"), the Company's largest shareholder, for the purchase of 20,000 tons
of off spec coal (the "Coal"). The Agreement takes the form of a one-off coal
purchase order and is not part of the existing Offtake Agreement (as defined
below) with Avani.

 

Under the terms of the Agreement, Avani will pay a price of $60 per ton for
the Coal and $50 per ton (totalling $1.0 million) has been received by the
Company as an advance payment on delivery of the Coal. The balance of $10 per
ton (totalling $0.2 million) will be paid by Avani upon delivery of the Coal.

 

The off spec coal that is subject to the Agreement is coal that does not meet
the chemical construction required to meet the definition of High Vol A or
High Vol B metallurgical coal.

 

Operational update

 

As detailed in the Company's trading update released on 9 February 2024, the
Company has, since the beginning of 2024, faced a number of operational and
financial challenges which have included, amongst other things, a depressed
metallurgical coal price and interruptions in production at the mine in West
Virginia. These pressures have put continued strain on the Company's cashflows
which resulted in Avani, as the Company's largest shareholder, providing a
working capital facility of $10.0 million to Bens Creek in February 2024. This
facility was drawn down in full during February 2024 and March 2024.

 

Avani has also entered into a long-term offtake agreement with Bens Creek,
details of which were announced on 29 February 2024 (the "Offtake Agreement").
Nevertheless, the outlook for the coal mining industry and Bens Creek as a
company remains challenging at the current time. At the current metallurgical
coal prices (as at 5 April 2024 the High Vol B price of metallurgical coal was
$195 per ton) the Company continues to be loss-making at the operational
level. In addition, whilst the mine is back in production following the
unexpected interruption in early 2024 due to an issue with waste disposal and
refuse cells at the mine, the Company presently has a reduced production
capacity which is estimated to be between 30,000 and 35,000 clean tons per
month. The current reduction in production capacity is a consequence of the
waste disposal issues that occurred at the mine in early 2024 and has also
resulted in one of the Company's highwall miners being taken off site on a
temporary basis.

 

Following the full draw down of the previously announced loan facility with
Avani and the continued challenges the Company faces, as detailed above, the
Company continues to manage its working capital position carefully and in this
regard is assessing the options available to the Company at the present time.

 

Terms of the Agreement

 

 Seller       Bens Creek Operations WV LLC
 Buyer        Avani Resources Pte Ltd
 Tonnage      Two (2) unit trains to be loaded at Glen Alum of Bens Creek Soft coal.
              Minimum 10,000 sts each train.
 Timing       2(nd) half April 2024/1(st)half May or on schedule to be mutually agreed and

            based on NS CLDs granted to Avani.

 Loading      Bens Creek will have to guarantee staff/personnel will be made available to
              load trains upon an agreed CLD / Permit dates issued by the Norfolk Southern
              (NS) railroad.
 Quality                                   Moisture:
                                      7% ar

              Ash:        8.0% dry typical tolerance to 8.5% for the entire train

              Sulfur:                              < 0.85%
              dry

              Volatile:                            34 - 35% dry

              FSI/CSN                           6 minimum

              Oxidation:                       75% min

              ARNU:                               +50

              DDPM:                              +4000

 Pricing      US$ 60/st prepayment for two (2) trains @ 20,000 sts.
 Adjustments  Material has already been tested and complies with the quality above.  This

              will be verified by trains analysis performed by SGS with weights also being

              verified by NS dump weights or certified scale weights.  If quality varies

              substantially from the above measures, Avani will have the right to recovery

              methods.

 

Related party transaction

 

Bens Creek entering into the Agreement with Avani is deemed to be a
transaction with a related party pursuant to rule 13 of the AIM Rules for
Companies by virtue of Avani being a 29.86% shareholder of the Company. The
directors of the Company (except for Rajesh Johar who represents Avani on the
Company's board) consider, having consulted with the Company's nominated
adviser, Allenby Capital Limited, that the terms of the Agreement with Avani
are fair and reasonable insofar as the Company's shareholders are concerned.

 

 

 

For further information please contact:

Bens Creek Group plc
                                                                                           +44
(0) 204 558 2300

Adam Wilson, CEO

Peter Shea, Chief of Staff

 

Allenby Capital Limited (Nominated Adviser and Joint Broker)
               +44 (0) 203 328 5656

Nick Athanas / Nick Naylor / George Payne (Corporate Finance)

Kelly Gardiner / Guy McDougall (Sales and Corporate Broking)

 

WH Ireland Limited (Joint Broker)

Harry Ansell / Katy Mitchell
                                                                                 +44
(0) 207 220 1666

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