Paringa Resources Ltd. is looking to raise cash to fund the ramp-up to positive cashflow at its Poplar Grove coal mine, part of the Buck Creek Complex in western Kentucky.
The company said Sept. 18 that it has a funding gap due to a slower-than-expected mine ramp-up but expects to be free cash flow positive in February 2020 on a two-unit basis.
Paringa entered into a term sheet to grant a 2% gross revenue royalty over the Buck Creek mining complex to Tribeca Global Resources Credit Pty. Ltd. in exchange for US$9.0 million.
The royalty financing allows the company to resize the second tranche of its US$56 million term loan facility from Tribeca to US$10 million from US$16 million.
The company noted that if it is unable to complete the deal, it will need to raise additional capital or negotiate waivers with Tribeca to avoid defaulting on the term loan.
The agreement is conditional on Paringa completing a minimum US$5 million equity raising, for which the company launched a 1-for-4 entitlement offer of new shares at 7 Australian cents apiece to raise up to about A$8.1 million.
