(Alliance News) - Bens Creek Group PLC shares sank nearly 20% on Monday morning, as the company announced another coal contract with its largest shareholder following a tough start to 2024.
Bens Creek is the owner and operator of metallurgical coal mines across North America. Shares in the company were down 19% to 1.20 pence each in London on Monday morning.
This came after Bens Creek said that its wholly owned subsidiary Bens Creek Operations WV LLC had signed a one-off coal purchase order with Avani Resources Pte Ltd for 20,000 tonnes of spec coal.
Avani is a Singapore-based energy commodity trader, and Bens Creek's largest shareholder with a 30% stake.
Under the terms of the agreement, Avani will pay USD60 per tonne for the coal, USD50 per tonne of which has already been received as an advanced payment. The remaining USD10 per tonne will be paid upon delivery.
Bens Creek said that the coal being delivered "does not meet the chemical construction required to meet the definition of High Vol A or High Vol B metallurgical coal".
Bens Creek added that "a depressed metallurgical coal price and interruptions in production at the mine in West Virginia" had put a strain on the company's cashflow in the first months of 2024.
While its West Virginia mine is once again operational, Bens Creek said that the company is operating at a reduced production capacity of between 30,000 and 35,000 tonnes per month.
These pressures required Avani to provide Bens Creek with a USD10.0 million working capital facility in February, which was fully drawn down in March.
Bens Creek also entered a long-term offtake agreement with the shareholder in February for the delivery of around 400,000 tonnes of Bens Creek's High Vol B Metallurgical coal.
The latest one-off coal purchase does not form part of this offtake agreement, Bens Creek said.
"Following the full draw down of the previously announced loan facility with Avani and the continued challenges the company faces...the company continues to manage its working capital position carefully and in this regard is assessing the options available to the company at the present time," it added.
By Hugh Cameron, Alliance News reporter
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Bens Creek (BEN)