Riversdale to ramp up Benga

RIVERSDALE Mining is undertaking a $A337 million capital raising as it shoots for 20 million tonnes per annum of raw production at the Benga coking and thermal coal mine in Mozambique by 2013.
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Benga mine opening in Mozambique

Blair Price

The capital raising includes a fully-underwritten institutional placement of $102 million and a 1 for 8 fully-underwritten, non-renounceable pro-rata entitlement offer to eligible shareholders.


The institutional component of the entitlement offer weighs up to $165 million while the retail component accounts for $70 million.


All the offers are at a fixed price of $9.40 per Riversdale share.


While Riversdale shares are not yet trading this morning, they closed at $10.30 yesterday – with the capital raising offers at an 8.74% discount to this price.


Riversdale said the funds raised will cover part of its contribution of the stage two and three development of the mine it shares with joint venture partner Tata Steel.


Some of the cash will also be used for exploration on other tenements in the country, and to accelerate “logistics development”


The completion of stage one development to reach 5.3Mtpa of run-of-mine coal is due in mid-2011.


Stage two to reach 10.6Mtpa of ROM coal was targeting 2014, while stage three to get to 20Mtpa did not have a scheduled date.


But Riversdale is accelerating its development plans, aiming for stage three development by 2013.


“Securing funds through the raising to fast-track Benga’s development is intended to maximise Riversdale’s ability to acquire infrastructure capacity as the Benga coal mine is developed,” Riversdale executive chairman, Michael O’Keeffe said.


“The raising is also expected to enhance Riversdale’s free float and liquidity, and the staged funding of Benga’s development through equity and alternative sources allows for an efficient utilisation of Riversdale’s balance sheet.”


Total coal resources at Benga just exceed 4 billion tonnes, with 18% in the measured category, 9% indicated and 73% inferred.


Tata Steel owns 35% of the JV and will firm up coking coal supply through Benga.


Riversdale recently lifted the total coal resources at the nearby Zambeze project from 1.7 billion tonnes to more than 9Bt.


Tata Steel, CSN Europe and Passport Capital are the three largest shareholders of Riversdale and will all take up their pro-rata entitlements under the capital raising.