In a presentation Cockatoo revealed that the March quarter cancellation of the $A255 million Baralaba expansion project finance facility it lined up with ANZ last year saved Cockatoo almost $5.63 million in fees with market conditions making it “untenable”.
Cockatoo decided instead to issue new equity under a $125 million recapitalisation program.
“Some kind of major restructuring was unavoidable if the Baralaba Expansion project was to be developed and the company was to remain in business,” Cockatoo chairman Peter Richards said in an address to shareholders yesterday.
“The approach adopted by the board and proposed to shareholders was the only available option that preserved some value for existing equity holders and where all existing shareholders were treated equally and could benefit from potential uplift in value created by the Baralaba complex.
“In the end, gross proceeds of $125 million was raised by new equity investment from existing and new institutional shareholders with all existing shareholders treated equally with their right to participate, or not, in the future of Cockatoo Coal.”
He said the equity brought in the new investor, Liberty Metals & Mining Holdings, and ensured Cockatoo moved ahead when the coal sector was struggling and many Australian coal projects had “stagnated or collapsed”.
The meeting yesterday approved a deal to give commodities trader Noble up to 1.9 million tonnes per annum of coal offtake from the expanded Baralaba mine by 2020 (out of 3.5Mtpa nameplate capacity).
The vote passed although most shareholders abstained from it.
“Whilst this reduces the total amount of coal available for sale to other customers, importantly the company negotiates price quarterly and retains the right not to supply Noble Group if it has a more attractive option,” Richards said.
Cockatoo has also completed Baralaba mining re-optimisation work and will consequently attempt to mine more than 95% of its coal at the pulverised coal injection-grade of metallurgical coal over the next two years, while extracting some thermal coal over the following three years.
The “gradual” ramp up from existing 1Mtpa capacity to the expansion target of 3.5Mtpa has also been pushed back to the second half of 2018. It was previously expected sometime in 2017.
