Paringa Resources Provides an Update on Poplar Grove Mine

  • Mar 26, 2019 AEDT
  • Team Kalkine
Paringa Resources Provides an Update on Poplar Grove Mine

Paringa Resources Limited (ASX: PNL) declared on 26 March 2019 that in the initial ramp-up phase the underground mucking and transportation of Run of Mine (RoM) material to the surface has to-date been undertaken using underground loaders, rather than a permanent slope conveyor.

PNL produces high-quality thermal coal and is a low-cost coal producer in the Illinois Coal Basin. The company’s Buck Creek Mine Complex consists of Poplar Grove Mine, which started functioning from December last year, along with the undeveloped Cypress Mine.

The initial RoM coal volumes brought to the surface were lesser than the anticipation because of an MSHA directive which had set a limit to the operations to a single loader. Therefore, PNL has decided to install the slope conveyor earlier than the scheduled time. The slope conveyor has capabilities of carrying up to 2,000 tons of RoM on an hourly basis from the bottom of the slope. The capacity would help PNL to enhance the scheduled ramp-up of production from the mine.

The first coal sales are now anticipated from April 22 week rather than the present week. There would be a delay in the initial shipment of coal, but the establishment of the permanent ventilation system and operations utilising the mine slope would allow PNL to start an underground room along with the pillar mining sequence.

The underground connection which has been planned to be made this week would enable the ventilation update required to commission the 400-hp main mine fan. It would allow the establishment of the permanent ventilation system.

Recently, the company declared to the market that Tribeca Global Resources Credit Pty Limited (Tribeca) had agreed to offer a Term Loan Facility (TLF) of USD 56 million (debt financing) for the purpose of refinancing existing debt, expansion development of the Poplar Grove Coal Mine (Poplar Grove) and working capital. The TLF would be utilised to refinance PNL’s existing USD 21.7 million debt facility, fund accelerated expansion of the third mining unit, and provided additional working capital.

Based on the long term committed contract prices and at a steady state of production of circa 2.8Mtpa, the Poplar Grove Mine is predicted to produce CY2021 and CY2023 EBITDA of around A$40 million and A$50 million respectively. The 3.8 Mtpa Cypress Project continues to be ready for the shovel.

According to its interim financial report for the last 6 months ended 31 December, 2018 recorded the cash reserves of US$11.9 million compared to US$22.6 million on 30 June 2018. On December 31, 2018, PNL recorded gross debt of US$21.0 million and net debt of US$17.1 million compared to $0.4 million on 30 June 2018, because of offsetting capitalised loan establishment costs of US$3.9 million (which includes non-cash share-based payments of US$1.3 million). At December 31, 2018, the Company had undrawn facilities of US$27.6 million (June 30, 2018: nil), comprising US$6.7 million under its Macquarie project loan facility and US$20.9 million under its Komatsu equipment financing facility.

On 31 January 2019, the company announced that it had signed Sales Agreement with Big Rivers Electric Corporation.

By the closure of the trading session, the stock of the company stood at A$0.150 (as on 26 March 2019), down by 6.25% from its previous close.


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