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 $195 per ton) the Company
continues to be loss-making at the operational level. In addition,
whilst the mine is back in production following the unexpected
interruption in early 2024 due to an issue with waste disposal and
refuse cells at the mine, the Company presently has a reduced
production capacity which is estimated to be between 30,000 and
35,000 clean tons per month. The current reduction in production
capacity is a consequence of the waste disposal issues that
occurred at the mine in early 2024 and has also resulted in one of
the Company's highwall miners being taken off site on a temporary
basis.
Following the full draw down of the
previously announced loan facility with Avani and the continued
challenges the Company faces, as detailed above, the Company
continues to manage its working capital position carefully and in
this regard is assessing the options available to the Company at
the present time.
Terms of the Agreement
|
Seller
|
Bens Creek Operations WV LLC
|
|
Buyer
|
Avani Resources Pte Ltd
|
|
Tonnage
|
Two (2) unit trains to be loaded at Glen Alum of
Bens Creek Soft coal. Minimum 10,000 sts each
train.
|
|
Timing
|
2nd half April
2024/1sthalf May or on schedule to be mutually agreed
and based on NS CLDs granted to Avani.
|
|
Loading
|
Bens Creek will have to guarantee
staff/personnel will be made available to load trains upon an
agreed CLD / Permit dates issued by the Norfolk Southern (NS)
railroad.
|
|
Quality
|
Moisture:
7% ar
Ash:
8.0% dry typical tolerance to 8.5% for the entire
train
Sulfur:
< 0.85% dry
Volatile:
34 - 35% dry
FSI/CSN
6 minimum
Oxidation:
75% min
ARNU:
+50
DDPM:
+4000
|
|
Pricing
|
US$ 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