REG - Bens Creek Group PLC - Highwall miner & issue of loan note to raise $6.5m

Bens CreekAnnouncement

26/06/2023 07:00

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RNS Number : 8119D  Bens Creek Group PLC  26 June 2023

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.

 

26 June 2023

 

Bens Creek Group plc

("Bens Creek", the "Group" or the "Company")

 

Highwall miner update, issue of loan notes to raise $6.5 million, related
party transaction and production update.

 

Bens Creek Group plc (AIM:BEN), the owner of a metallurgical coal mine in
North America supplying the steel industry, announces that, further to the
Company's release of 5 May 2023 in respect of the arrival, installation and
commencement of operations of the highwall miner, unit 81 ("HWM 81"), HWM 81
has been temporarily withdrawn from service pending completion of repairs and
re-establishment of the necessary benching following a mining incident earlier
in the month. The incident occurred during regular mining operations when the
cutterhead of HWM 81 and a number of beams met a void, resulting in the
cutterhead and beams becoming trapped. While the Company is disappointed that
the incident occurred, the Company is pleased that no injuries were sustained
by any of the personnel on site.

 

Regulations require that the U.S. Department of Labor's, Mine Safety and
Health Administration ("MSHA") examine and approve any recovery or retrieval
plan before it is implemented. The Company is pleased to confirm that it has
received the required approvals from MSHA and, along with Mega Highwall Mining
LLC ("Mega HWM"), the Company's highwall mining contractor, the Company has
completed the recovery process and HWM 81 is expected to be back in full
production by the middle of August 2023. It should be noted that, other than a
reduction in production on a temporary basis, no other costs relating to this
incident will fall to Bens Creek. Despite the temporary reduction in
production capability, the Company is confident that it will fulfil all its
current orders.

 

The Company also announces that the Group has raised $6,500,000 (equivalent to
c. £5,110,000 based on current exchanges rates) through Bens Creek Operations
LLC ("Bens Creek Operations"), a 100% owned subsidiary of the Company, issuing
unsecured loan notes (the "Loan Notes" or the "Notes") to Avani Resources Pte
Ltd (the "Lender" or "Avani "), the Company's largest shareholder.

 

The price of metallurgical coal has been volatile over recent months, with a
steady decline to the low $190s per tonne. As a result, the Group has, through
Bens Creek Operations and as a precautionary measure, issued $6.5 million of
Loan Notes to Avani. The proceeds of the issue of the Loan Notes will be used:
(i) to finance an increase of the Group's earthmoving fleet, which will ensure
that benching requirements needed to sustain Bens Creek's two highwall miners
in continuous production are met; and (ii) for the Group's general working
capital requirements.

 

Terms of the Loan Notes

 

On 23 June 2023 Bens Creek Operations entered into an unsecured loan note
agreement (the "Loan") with the Lender for a total subscription of $6,500,000
in Loan Notes. The Loan Notes have a term of two years and interest will roll
up and be repaid as a bullet on the second anniversary of the Loan Note (the
"Repayment Date").

 

Bens Creek Operations will repay to the Lender $2 per tonne of clean coal sold
within 7 business days of production (the "Coal Payments"). The principal
outstanding under the Loan Notes, less Coal Payments or other prepayments,
will be repayable on the Repayment Date.

 

Simple interest shall be added to the principal amount of the outstanding
Notes on each relevant Repayment Date. The interest shall be calculated at a
rate of 15.1% per annum from and including the date of issue of each Note up
to and including the date of the redemption or repurchase of the relevant
Notes. The interest shall be payable in the same manner as in the case of the
original principal amount of the Note and shall otherwise be treated as
principal of the Note for all purposes.

 

In the event Bens Creek Operations redeems or fully repays any Note prior to
the Repayment Date it shall, together with the payment of the principal amount
outstanding, pay for the account of the Lender a prepayment calculated at a
rate of 15% per annum from and including the date of issue of each Note up to
and including the date of the redemption or repurchase of the relevant Notes.

 

The amount described in the paragraph above shall become payable by Bens Creek
Operations upon a prepayment or early redemption of the Notes prior to the
relevant Repayment Date.

 

Bens Creek Operations will pay the Lender's legal fees in relation to the
facility up to an agreed cap and it is anticipated the funds will be drawn
down by the Company immediately.

 

The Loan Notes are not convertible into new ordinary shares in the Company.

 

Related party transaction

 

The issue of the Loan Notes by Bens Creek Operations to Avani is deemed to be
a related party transaction 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 (who are all independent of Avani) consider, having consulted with
the Company's nominated adviser, Allenby Capital Limited, that the terms of
the transaction are fair and reasonable insofar as the Company's shareholders
are concerned.

 

Production update

 

The Group also announces that during the period 1(st) October 2022 to 31(st)
March 2023 it produced     172,390 tonnes of clean metallurgical coal.

 

The Group expects to provide a further production update at the time of
publication of its annual report for the period ending 31(st) March 2023.
Following this the Group intends to provide quarterly production updates.

 

Adam Wilson, Chief Executive Officer of Bens Creek, commented:

 

"While we were disappointed about the incident, we are pleased that no
injuries occurred. We are delighted that MSHA moved quickly to assist us in
approving the recovery plan and we are hopeful that we will be back to full
operation within a few weeks.

 

"Our new shareholder, Avani, has quickly evidenced their commitment to the
business by putting in place this term loan to ensure that our working capital
is maintained during this extended period of pressure on coal prices."

 

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 (Sales and Corporate Broking)

 WH Ireland Limited (Joint Broker)                                                   +44 (0) 207 220 1666

 Harry Ansell / Katy Mitchell

 

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