Canada-listed Cline Mining (TSX: CMK.TO), which has recently redeveloped the long-shut New Elk coal mine in southeastern Colorado, announced Feb. 27 that it has issued certain senior secured bonds having a principal amount of US$25m.
This bond issuance is made in connection with the company’s previously announced debt financing where the company entered into a trust indenture with Computershare Trust Company of Canada and Marret Asset Management Inc. on behalf of certain investment funds which it advises. The trust indenture provides for the issuance by the vompany of up to US$50m senior secured bonds to the lenders provided certain conditions precedent to a draw down have been met.
Cline Mining said it has also notified the lenders of its intention to draw down on the balance of the commitment on April 30, whereby a further issuance of bonds having a principal amount of US$25m will occur.
Ken Bates, Cline Mining’s President and CEO, said: “We are eager to expand the New Elk mine in order to meet our targeted production rates. As with any mine expansion plan, capital improvements are required and so the net proceeds from this bond issuance will provide Cline with a desirable reserve of funds which can be applied towards these objectives. The fact that the Company was permitted to draw down on the commitment in the midst of a global credit crunch is a strong signal to our investors that Cline will be able to weather any droughts in capital funding and that we will be on course to ramp up production in the near term.”
The New Elk deep mine is listed with the U.S. Mine Safety and Health Administration under New Elk Coal Co. LLC. The company’s stated plan is to get the mine into full commercial production of high quality metallurgical coal at a rate of 3 million tons of saleable coal annually, with the full planned production rate to be attained during the first half of 2012. Saleable coal production during calendar year 2012 is projected at 2.5 million tons, with production in the years 2013 and annually thereafter at the rate of 3 million tons. The company is also looking at installation of a longwall in this room-and-pillar mine as early as 2014, which would effectively double the mine’s production to about 6 million tons per year.