German Creek hold-up delays Bounty raising

DELAYS in starting production at Anglo American’s Aquila and Bundoora collieries at German Creek in Queensland have led to contractor Bounty Mining receiving a default notice, effectively forcing it to delay a $10 million capital raising.
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Image courtesy of Bounty Mining.

Lou Caruana

Bounty, which lost $12.88 million for the 2008-09 financial year, was seeking to repay its existing secured debt in full with the funds as well as boost its thin-seam mining equipment fleet.

“Bounty Mining … received a default notice relating to its contract with Anglo American at German Creek, stemming mainly from delays in starting production,” the company said in a statement.

“The board believes that Bounty is well advanced in addressing the issues.

“The board and management team are fully focused on resolving the issue. As a result, the board has decided to withdraw the prospectus that was lodged on 10 December 2010, and defer the capital raising until later in the financial year.”

The underground coal services provider had planned to raise the money through a seven-for-five non-renounceable rights issue so it could resume trading on the Australian Securities Exchange in January.

Bounty ended the recent financial year with a loss of $5.38 million after emerging from voluntary administration.

Earlier this year the company won a two-year contract to provide bord and pillar mining services to Anglo American Metallurgical Coal’s Aquila and Bundoora mines.

The Aquila project would have used one fleet of Bounty equipment including its continuous haulage gear.

The Bundoora contract mainly uses AAMC’s equipment.

AAMC also had an option to extend Bounty’s contract for the two mines for one year.

Bounty Mining chairman Gary Cochrane said the company was continuing to discuss new contracts at mines in both Queensland and New South Wales.

“The directors of Bounty are confident that the fortunes of the company have begun to turn around, as evidenced by these significant new contracts,” he said at the time of the AAMC contracts.

“This has supported our view of the long-term strength of the export coal sector.”

In May, Bounty won a six-month contract to provide labour hire services to assist gate road development at Xstrata’s Oaky Creek North longwall operation in Queensland.

All these contracts are expected to generate revenues exceeding $30 million per year.

Bounty previously said it expected to lift its workforce of 35 to more than 100 in early 2011 as it negotiated the extension of its mains development contract at Oaky North.

“2011 is shaping up to be an exciting year for Bounty and its shareholders,” Cochrane said earlier this year.

“As owner and operator of one of the few thin-seam equipment fleets in Australia, we are a valuable prospective partner and service provider to coal companies wanting to extract remnant high-grade coal seam deposits that are inaccessible with conventional equipment.

“We further anticipate making announcements in the new year regarding the appointment of a new chief executive officer and an extension to our existing contract with the Xstrata Group.”