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Alberta, Canada, Feb 27, 2012 – (ABN Newswire) – Coalspur Mines Limited (ASX:CPL.AX – News) (TOR:CPT.TO – News) is pleased to announce that it has entered into a binding agreement with the Highland Park Group for a C$70 million loan facility (“Facility Agreement”). The purpose of the Facility Agreement is to provide the Company with substantial capital resources to commence detailed engineering on its flagship Vista Coal Project (“Vista”) and pursue further business development opportunities.
Commenting on the agreement, Managing Director and CEO, Gene Wusaty said “We are extremely happy to have concluded this agreement in the current market. The Facility Agreement will significantly strengthen the Company’s financial position as we will have access to approximately C$100 million in cash and credit lines. The Company is now positioned to fund all anticipated activities at Vista through to the start of construction in early 2013. We expect these activities to have a positive impact on shareholder value during 2012. The agreement underlines the Highland Park Group’s commitment to the Company and provides Coalspur with significant flexibility to assemble an optimal funding solution for the remaining capital requirements of Vista.”
Coalspur anticipates that detailed engineering on Vista will commence in the coming weeks with completion scheduled for early 2013. In addition, Coalspur is focused on several additional initiatives as it prepares for construction on Vista. These initiatives include progressing project financing discussions with potential off-take partners, evaluating the utilization of a mining contractor and submitting the final regulatory applications required to begin construction.
The Facility Agreement will be subject to the necessary shareholder and TSX approvals.
Facility Agreement
The key terms and conditions of the Facility Agreement are as follows:
1. The facility is for up to C$70 million;
2. Interest is payable every 180 days and bears an annual interest rate of 6.25%;
3. Facility type – secured;
4. Drawdown period – 12 months from the satisfaction of the conditions precedent;
5. Repayment period – 24 months with from first draw down;
6. Coalspur may repay the facility early, at its discretion, with no penalty;
7. Subject to shareholder approval Coalspur will issue the Highland Park Group 8 million unlisted options with an exercise price equal to the volume weighted average market price for the 5 trading days prior to execution of the Facility Agreement expiring 3 years from the date of issue and 7 million unlisted options (which will vest at the rate of 1 million options on the draw down date of each C$10 million tranche) at an exercise price equal to the greater of 80% of the volume weighted average market price for the 5 trading days prior to execution of the Facility Agreement and 120% of the volume weighted average market price for the 5 trading days prior to each vesting date and each tranche of 1 million options expiring 3 years from their respective vesting date. Unvested options cannot be exercised and will expire on repayment or termination of the Facility Agreement.
About Coalspur Mines Limited:
Coalspur Mines Limited (“Coalspur” or “Company”) is a coal exploration and development company with approximately 40,600 hectares of coal leases located within the Hinton region of Alberta, Canada. Coalspur’s flagship coal project is the Vista Coal Project (“Vista”) which has the potential to be the largest export thermal coal mine in Canada.
Vista covers approximately 9,984 hectares and provides a large scale, surface mineable, thermal coal project. Vista has the advantage of leveraging off of established first world infrastructure with CN Rail’s main line located adjacent to Vista which is substantially underutilised and provides a rail line suitable for the transport of coal to deepwater ports on Canada’s west coast. Coalspur has also secured a port allocation agreement with Ridley Terminals Inc. which is essential to the logics supply chain necessary to export coal from Vista to the growing demand from the Asia Pacific Rim countries, including China, Japan, and Korea.
A feasibility study was completed on Vista in January 2012, which defined a 30 year mine plan with forecast annual production capacity of 11.2Mtpa. Marketable Coal Reserves on Vista are 313Mt from a Recoverable Coal Reserve of approximately 566Mt. Initial development costs for Vista are expected to be approximately C$860 million with an additional approximately C$370 million required to reach full capacity.
Coalspur has offices in Calgary and Hinton in Canada as well as in Australia. The Company is dual listed on the Toronto Stock Exchange (“TSX”) under the symbol “CPT” and on the Australian Securities Exchange (“ASX”) under the symbol “CPL”.
