Bandanna cashed up after WICET sale

QUEENSLAND coal mine developer Bandanna Energy has cash reserves of $121 million after selling its preference equity in WICET Holdings for $47 million, but its market capitalisation remains at just $58 million.
Bandanna cashed up after WICET sale Bandanna cashed up after WICET sale Bandanna cashed up after WICET sale Bandanna cashed up after WICET sale Bandanna cashed up after WICET sale

South Galilee project drilling, image courtesy of Bandanna.

Lou Caruana

The company said that $23 million of its cash reserves remained committed as security against its infrastructure contracts.

Part of the funds raised will be applied to the ongoing approvals process leading to a mining lease at the Springsure Creek Coal project. They will also be used for related pre-development activities including land acquisition, compensation and further development of the co-existence strategy for agriculture and mining at Springsure Creek.

Some funds will also be applied to further optimisation studies aimed at enhancing productivity and further reducing costs for the project, managing director Michael Gray said.

“Bandanna’s initial $41 million investment in WIPS in September 2011, along with that of the other WICET Stage 1 shippers, was critical to ensuring completion of the $2.5 billion financing package to enable commencement of construction of the port,” he said.

“With the port construction now more than 60% complete, Bandanna Energy considers that those funds would be better applied directly towards continued progress of development of Springsure Creek.”

The sale of the WIPS has no impact on the company’s allocated port capacity in WICET Stage 1. Bandanna Energy maintains its 14% shareholding in Wiggins Island Coal Export Terminal (WICET) Stage 1 at Gladstone and its representation on the WICET Board, together with port allocation of 4Mtpa and the associated infrastructure capacity for the integrated rail haulage of coal from the Springsure Creek Project to the port.

“The investment in the WICET preference equity by the acquiring party, a global infrastructure investor, demonstrates the investment market’s understanding and confidence that WICET Stage 1 will facilitate the growth of Queensland’s coal export market in line with our forecasts for an increase in the demand for Queensland thermal coal by 2015,” Gray said.