Kangaroo Resources has announced it has completed US$14 million capital raising to further develop coal production at its projects in Indonesia.
Kangaroo Resources has announced it has completed a US$14 million capital raising to further develop coal production at its coal projects in Indonesia.
In a statement, Kangaroo Resources said it had completed the agreement with institutional investors through a convertible note instrument.
Chardan Capital Markets has coordinated the capital raising.
The convertible notes will be issued in two tranches, with an initial tranche to raise US$2.5 million under the Company's 15 per cent placement capacity and a second tranche to raise US$11.4 million which will be the subject of resolutions to be put to shareholders at a general meeting.
"The completion of this funding represents a tremendous result for the Company, which has been achieved in a very challenging market environment," said Kangaroo Resources managing director Mark O'Keeffe.
"We have a great portfolio of coal assets in Indonesia and these additional funds will enable the Company to build on the production base it has already established," he said.
See full company statement below:
International coal producer Kangaroo Resources Limited ("KRL" or the "Company") is pleased to advise that it has completed a funding agreement with key institutional investors to raise US$14 million through a convertible note instrument to further develop coal production at its flagship projects in Indonesia.
The capital raising has been coordinated by Chardan Capital Markets (New York and Sydney).
The funds raised will be used specifically to progress the Company's key Indonesian coal projects, in particular the ramp-up of production and exploration at the Mamahak Coking Coal Project, and to advance exploration across the balance of the Company's key properties.
KRL Managing Director, Mark O'Keeffe said: "The completion of this funding represents a tremendous result for the Company, which has been achieved in a very challenging market environment. We have a great portfolio of coal assets in Indonesia and these additional funds will enable the Company to build on the production base it has already established."
At the Mamahak Project, the funds will be used for the following key purposes:
To lease additional mining equipment and infrastructure to expand the mineable tonnes currently achievable on existing reserves;
To secure contracts for additional barges to ship coal down the Mahakam River to coal terminals for sale;
To progress further drilling as required in a bid to expand the existing JORC resource inventory and ore reserves within the concession area; and
To provide additional working capital to enable the Company to deliver on its overall production objectives.
KRL is currently in the process of shipping the initial 50,000 tonnes coal from Mamahak to the coal terminal for delivery into existing coal sales agreements. The Company intends to secure additional barges to expedite this delivery and standardize its logistics which will in turn allow KRL to increase sales revenue going forward.
The convertible notes will be issued in two tranches, with an initial tranche to raise US$2,554,000 under the Company's 15% placement capacity and a second tranche to raise US$11,446,000, which will be the subject of resolutions to be put to shareholders in general meeting ("EGM"), and to this end the Company will despatch a notice of meeting to shareholders shortly.
The key terms of the Convertible Notes are outlined below.
In addition, the major shareholders of KRL, including Board, management and key Indonesian partners, who previously had voluntarily escrowed 277.5 million of their own shares to December 2010 have agreed, as part of this capital raising, (i) to vote to approve the issuance of the second tranche of convertible notes at the EGM and (ii), as reinforcement of their confidence and commitment, to extend the existing voluntary escrow on their shares for a further 12 months until December 2011, or until the convertible notes are fully retired.
Mr O'Keeffe added "KRL raised initial funding at the end of 2009 to acquire coal assets in Indonesia and move to an early stage of production, both of which have now been achieved. In addition, we were able to secure the valuable Mamahak coking coal asset and deliver this into our portfolio.
"The Company has achieved a lot in the past 12 months and this second phase of funding was always required to build the Company to the next level, namely a more mature, Indonesian-focussed coal production company with strong upside."
