(Alliance News) - Bens Creek Group PLC said that operational challenges over the recent period had impacted the company's cash flow, forcing it to update funding arrangements with its largest shareholder.
Bens Creek owns and operates metallurgical coal mines across the US, including the 10,000-acre Bens Creek mining project in West Virginia. Shares in the company were down 21% at 6.50 pence each in London on Friday morning.
This came after Bens Creek reported a combination of difficulties in the year so far, which have taken their toll on the company's cash flows despite a recovery in metallurgical coal prices towards the end of 2023.
In West Virginia, storms and flooding over the past two months, alongside a period of interruption at the Bens Creek mine due to waste disposal issues have impacted the company's operations.
While the latter have now been resolved, Bens Creek said that Norfolk Southern Railroad has been unable to provide a sufficient number of trains to transport produced coal. In January, the company said that the resulting delays had led to an inventory build-up of around 90,000 tonnes. This was reduced to 60,000 after some deliveries were made, but the company said that the backlog remains "substantial".
Avani Resources Pte Ltd, a Singapore-based commodities trader which holds a 30% stake in Bens Creek, has agreed to provide an additional working capital facility of up to USD5.0 million. The facility is in the process of being documented, and remains subject to an offtake agreement being entered into by the two companies.
The company said that it was in "advanced discussions" regarding a 12-month offtake agreement with Avani for the delivery of around 400,000 short tonnes of coal in the next few months.
Avani has advanced USD1.3 million to Bens Creek to support operations during this challenging period. As a result, the company expects that amendments will be made to the pair's previous GBP6.5 million loan facility, which was put in place in July.
The company also announced that Chief Executive Officer Adam Wilson would be stepping down, having served in the role since the company floated in 2021. Wilson will continue in his role until a replacement CEO has been appointed, and Bens Creek said that the search for a successor was underway.
By Hugh Cameron, Alliance News reporter
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Bens Creek (BEN)