TIDMATC
RNS Number : 9452V
Atlantic Coal PLC
21 January 2013
Atlantic Coal plc/Index: AIM/Epic: ATC/Sector: Mining
21 January 2013
Atlantic Coal plc ("Atlantic Coal" or the "Company")
Exercise of up to 20 year lease option over the 410 acre Pott
& Bannon Pennsylvanian anthracite mining property and entry
into a conditional coal purchase agreement
Atlantic Coal plc, the AIM listed opencast coal production and
processing company with activities in Pennsylvania, USA, is pleased
to announce that it has exercised its lease option over the fully
permitted 410 acre Pott & Bannon anthracite mining property in
New Castle Township, Schuylkill County, Pennsylvania (the
"Property"). Further details of the lease option agreement are
contained in the Company's announcement on 3 January 2012 (the
"Lease Option").
Highlights:
-- Consideration of US$6.0 million in cash, coal and shares
payable to Reading Anthracite Company ("RAC") plus the grant of
US$3.0 million worth of warrants over Atlantic Coal new ordinary
shares at 0.75 pence per share
-- As announced on 03.01.12, at that time the Directors believed
that the Property could contain up to 13.6 million tons run-of-mine
("ROM") coal, equating to approximately 4.1 million tons of washed,
saleable anthracite* based on information provided to the Company
in a report, commissioned by RAC in January 1999 and prepared by
John T. Boyd & Company. The average strip ratio was estimated
to be 3.9 ROM.*
-- Site located 25 miles from the Company's Stockton site in the
productive Pennsylvanian Anthracitic Belt with established
infrastructure and industrial and domestic demand
-- Agreement is part of the Company's strategy of increasing its
current reserves and production profile, particularly in the
Pennsylvania Anthracitic Belt
* There can be no guarantee that these figures remain accurate
as at the date of this announcement or that the qualified person's
report will reconfirm these numbers and further announcements will
be made in this regard at the appropriate time.
Atlantic Coal's Managing Director, Steve Best, said, "The Pott
& Bannon site, which the Board estimates has the potential to
more than treble Atlantic Coal's existing reserves, is a
potentially transformational addition to our Pennsylvanian
portfolio and having minimised the cash portion payable as part of
the transaction, we believe that this represents value for
shareholders.
"We intend to pursue an early route to production at the
Property and are currently in the process of producing a detailed
mine plan and updated Reserve report. We intend to commence
operations over the next 12 months and envisage this to be a
stand-alone project, benefitting from excellent local
infrastructure and robust regional demand. Additionally, with only
25 miles separating Pott & Bannon from our existing Stockton
Colliery, where we recently reported record production, we believe
that we will be able to take advantage of the potential synergies
that exist with our current operations.
"Importantly, we also continue with our due diligence process
over additional anthracite assets in Pennsylvania, further details
of which are contained in the Company's announcements on 15
February 2012 and 29 October 2012. These are in line with our
long-term strategy of increasing the Company's reserves and
production profile, particularly in the Pennsylvania Anthracitic
Belt."
Background
Pott & Bannon is located 25 miles from Atlantic Coal's
existing producing opencast anthracite operation, the Stockton
Colliery and is well positioned in close proximity to major
east-coast transportation hubs. Like Stockton, the Pott &
Bannon site will mine the high quality Mammoth Seam.
As announced on 3 January 2012, at that time and based on
information provided to the Company in a report, commissioned by
RAC in January 1999 and prepared by John T. Boyd & Company, the
Directors believed that the Property could contain up to 13.6
million tons run-of-mine ("ROM") coal, equating to approximately
4.1Mt of washed, saleable anthracite*. The average strip ratio was
estimated to be 3.9 ROM*. Confirming these resource details will
form part of Atlantic Coal's initial preparatory work on the
Property and will be updated by a qualified person (as defined
within the AIM Rules for Companies).
* There can be no guarantee that these figures remain accurate
as at the date of this announcement or that the qualified person's
report will reconfirm these numbers and further announcements will
be made in this regard at the appropriate time.
Lease agreement
Atlantic Coal has confirmed or waived all of the various
conditions precedent as contained in the Lease Option relating to
due diligence, obtaining all necessary regulatory and shareholders
consents and the satisfaction of various other conditions
precedent, including the transfer of the relevant permits, and has
now entered into a lease of the Property (the "Lease") for an
initial period of ten years from the date that Atlantic Coal is
first permitted to commence mining at the Property (the "Initial
Period"). Following the expiry of the Initial Period, Atlantic Coal
will have the option to extend the Lease for two additional five
year periods.
The original terms of the Lease Option were announced on 3
January 2012 and included a non-refundable payment of US$250,000
made by Atlantic Coal to RAC in order to secure the Lease Option.
At the same time, a further payment of US$250,000 was placed in
escrow whilst Atlantic Coal carried out its due diligence and
pending exercise of the Lease Option and this is now to be released
to RAC.
Further, in consideration for Atlantic Coal confirming or
waiving the various conditions precedent as contained in the Lease
Option, RAC has agreed to vary the terms for satisfaction of the
consideration of US$6,000,000 for granting the Lease to Atlantic
Coal as follows:
-- as to the first US$250,000, by the immediate release of the
corresponding sum currently held in escrow to RAC;
-- to apply the US$250,000 paid by Atlantic Coal to secure the
Lease Option against the sums due in respect of the grant of the
Lease;
-- as to the next US$3,000,000, on or before 31 January 2014 by
Atlantic Coal making available 25,000 short tons of clean coal at a
price of US$120.00 per short ton from its Stockton Mine;
-- as to the remaining US$2,500,000, on the earlier of the first
anniversary of the commencement of mining operations at the
Property and 31 December 2015 and this sum shall be satisfied in:
(1) tons of ROM or clean coal from any mine controlled by Atlantic
Coal; (2) by the issue and allotment of a corresponding number of
new ordinary shares (to be determined by Atlantic Coal's VWAP for
the preceding three months) in Atlantic Coal to RAC (or, in certain
circumstances, to RAC's shareholders) (the "Consideration Shares");
or (3) in any combination of (1) and (2). The exact method of
satisfaction will be agreed between Atlantic Coal and RAC in
advance. If the parties cannot agree, then each party will have the
right to designate how half of the US$2,500,000 will be
satisfied.
RAC will also be issued with warrants to subscribe for up to
US$3,000,000 worth of new ordinary shares in Atlantic Coal at a
price of 0.75 pence per share for five years from the grant of the
Lease (the "Warrants"). A circular will be sent to shareholders at
the appropriate time so as to enable the Consideration Shares and
the Warrants to be issued to RAC.
Atlantic Coal has agreed to use its best endeavours to employ
mining equipment at the Property to achieve a minimum production of
400,000 tons of ROM coal in the second year of the Lease, provided
that market conditions warrant such a level of production.
Coal purchase agreement
Under the terms of the Lease, RAC will have the annual option to
purchase (at certain pre-agreed prices) up to 50 per cent. of all
sizes of standard coal provided that the standard coal meets
certain specifications. Further, until Atlantic Coal constructs a
processing plant at the Property, RAC will have the right to
purchase all of the raw coal mined by Atlantic Coal at the Property
at certain pre-agreed prices. Should Atlantic Coal determine that
it will not construct a processing plant at the Property, then
RAC's right to purchase all of the raw coal mined by Atlantic Coal
at the Property will reduce to 50 per cent. of all of the raw coal
mined by Atlantic Coal at the Property. Finally, RAC will be
granted the right of first refusal in respect of the purchase all
coal which does not meet certain pre-determined specifications.
However, in the event that any portion of the US$2,500,000
consideration is paid by Atlantic Coal to RAC in the form of ROM or
clean coal from the Property, then the RAC's right to purchase 50
per cent. of all sizes of standard coal from the Property shall be
reduced on a ton-for-ton basis at the price of US$120 per ton until
such time as the entire consideration has been satisfied in full at
which point RAC's purchase option rights under the coal purchase
agreement will be restored in full.
**ENDS**
For further information on the Company, visit:
www.atlanticcoal.com or contact:
Steve Best Atlantic Coal plc Tel: 020 3328 5670
Nick Naylor Allenby Capital Limited Tel: 020 3328 5656
Mark Connelly Allenby Capital Limited Tel: 020 3328 5656
Alex Price Allenby Capital Limited Tel: 020 3328 5656
Elisabeth Cowell St Brides Media & Finance Tel: 020 7236 1177
Ltd
This information is provided by RNS
The company news service from the London Stock Exchange
END
AGRDXGDBLUBBGXI
Atlantic Coal (LSE:ATC)
Historical Stock Chart
From Sep 2024 to Oct 2024
Atlantic Coal (LSE:ATC)
Historical Stock Chart
From Oct 2023 to Oct 2024