Universal secures debt for South African mines

OREANDA-NEWS. Australia-listed producer Universal Coal has secured A\$55mn (\$42.8mn) in debt funding to restart the 2mn t/yr New Clydesdale colliery (NCC) in South Africa and refinance its 2.1mn t/yr Kangala colliery.

Universal plans to restart NCC in the second half of this year. It bought the mine from South African producer Exxaro in February 2014 and says that A\$23mn of the debt funding will allow it to fund the final phase of development.

NCC will be Universal's second mine, after it shipped first coal from its 2.1mn t/yr Kangala mine in South Africa in September. Kangala is at full production capacity and \$30mn of the debt funding will go to refinancing project finance associated with the project. A further A\$2.6mn will be used for working capital for Kangala.

Universal exports around 100,000 t/yr of coal from Kangala, with the mine's remaining output supplied to South Africa's state-owned utility Eskom. The 6,000 kcal/kg export coal is delivered from Kangala to Exxaro's nearby Leewpan mine, which has access to the Delmas rail siding. The coal is then transported by rail to the Richards Bay Coal Terminal where it is marketed and exported by Exxaro.

NCC produced 717,000t of thermal coal in 2012, but Exxaro decided in April 2013 to put the project up for sale after it posted a loss and re-evaluation shortened its mine life. Universal is currently negotiating long-term offtake agreements for thermal and metallurgical coal from NCC.