Universal draws debt for Kangala

UNIVERSAL Coal has made the first drawdown on its 300 million rand ($US30.6 million) debt facility to help it remain on schedule to launch production at its Kangala mine in six months.
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Kangala, courtesy Universal Coal

Staff Reporter

The company did not disclose how much was drawn.

Universal has already fully funded the equity component of the mine with its partners, Mountain Rush, saying it will continue to draw down on the debt facility until the capital development phase has been completed at Kangala, the company’s first mine.

First production remains scheduled for February.

“With all project financing secured, we are beginning to draw down from the debt facility as we progress development activities and transition to producer status at Kangala,” Universal Coal’s chief executive officer Tony Weber said.

“We recently started box cut activities, and remain on track to supply first raw coal delivery for stockpile build-up in October 2013.

Kangala is in the Witbank coal field in Mpumalanga province. It is Universal’s first operation.

The capital cost for the project is $A46.8 ($US43.3) million and it is projected to supply an average $15 million earnings before interest, tax, depreciation and amortisation per annum, with costs and profit margins locked in.

Coal sales of 2.1Mt per annum have been split for two end uses, with 2Mtpa allocated for South Africa’s largest energy company, Eskom, and 100,000tpa of higher-quality thermal product allocated for export with South African coal company Exxaro.

“With Kangala set to generate cash flow for up to 16 years through our Eskom coal sales agreement, and significant cash flow upside through expansion and export production, the mine will play a key role in achieving our goal of becoming a mid-tier producer,” Weber added.

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