Bounty Mining Limited (ASX: B2Y) on 27 December 2018, disclosed the constrained in the working capital position as a result of the delay in production. As a result of the cancellation of two coking coal trains as well as one thermal coal train due to bushfires in the Gladstone area, train crew shortages followed by 24-hour industrial action, there was an impact on the production. As a result of the cancellation of trains, it severely impacted the working capital requirements. The company also received many proposals which were considered by the board. Subsequently, B2Y entered a trading halt on 18 December 2018, and the shares were suspended from training from 20 December 2018.
However, as per the recent update, the company has entered an agreement with the Amaroo Blackdown Investments Pte Ltd and Amaroo Blackdown Investments LLC which are entities of Amaroo who will be supporting B2Y in its working capital. In return, Amaroo entities will have voting power of 17.51%. Simultaneously, it becomes the largest shareholder of the company. Also, Amaroo entities along with the Xcoal Energy & Resources GmbH will be the key customers of B2Y.
The agreement states that B2Y will be provided an advance amount of $20,000,000 which the company can withdraw within 31 December 2018 and 25 April 2019 under terms and condition as follows:
The first term and condition are that the facility remains unsecured and the company must conduct a general meeting of the shareholders for seeking their approval.
The maximum amount which the company can withdraw is up to $20,000,000. The company can withdraw a maximum of A$5,000,000 on a monthly basis with effect from 31 December 2018. In case if there exists an outstanding balance, then B2Y can withdraw on 31 July 2019.
In exchange, Amaroo, and its associated entities (including Xcoal) will have the access of underground and surface facilities and books of account of B2Y.
Further, in case if B2Y is incapable of generating free cash flow after 31 January 2019 or it breaches the exclusive agreement, then the company will be considered as a defaulter.
The loan amount holds an interest rate of 8% per annum. Beyond 31 July 2019, an overdue rate of 12% per annum is applicable on the loan amount.
B2Y has also entered a prepaid sales agreement with Xcoal where 115,00k tonnes of saleable coking coal is still pending for delivery. As a result, payment worth US$4.7 million remains outstanding. B2Y is supposed to deliver another 550,000 tonnes of coking coal in CY2019. Now, both the parties have extended their prepaid agreement by the end of CY2020.
As a result of reduced production, the company discloses an updated guidance report where the company is supposed to produce 142,000 tonnes of saleable product. It might also result in lowering the production cost and revenue December quarter for FY2018.
The shares of B2Y is currently in suspended status. The share last traded at A$0.099.
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