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Financial update

2 Dec 2013 07:00

RNS Number : 3707U
Strategic Natural Resources PLC
02 December 2013
 



 

Strategic Natural Resources Plc

("SNR" or the "Company")

 

Financial update

 

Introduction

 

On 29 November 2013 SNR announced that it had been informed by its 74% subsidiary, Elitheni Coal (Pty) Limited ("Elitheni"), that Elitheni has received a liquidation notice (the "liquidation notice") in South Africa from a group of creditors. The liquidation notice (which has been issued under South African law) is due to be heard on 10 December 2013. Elitheni owns the Elitheni coal mine located in the Eastern Cape of South Africa and is a company incorporated under South Africa law.

 

Update on the liquidation notice

 

The board of Elitheni has told SNR that it considers the amounts being claimed pursuant to the liquidation notice significantly exceeds legitimate claims from the relevant creditors and Elitheni is taking legal advice in South Africa on disputing the liquidation notice and on clarifying the true amount of creditors' claims.

 

The liquidation notice is due to be heard in the South African courts on 10 December 2013. Should the court find that all the claims by the petitioning creditors are due and payable immediately then, in the absence of a further capital injection, the court will place Elitheni into liquidation.

 

To date SNR has, through its subsidiary Acharnian Mining Company Limited advanced circa £21.2 million of loans to Elitheni and SNR is the largest creditor of Elitheni. If Elitheni is placed in liquidation the Board of SNR believes that SNR would have no further liabilities to Elitheni and SNR would seek the recovery of its loans through the liquidation process. If Elitheni were to be placed in liquidation then the board of SNR would carefully consider its financial position and it particular its ability to meet its own obligations to its creditors. To date all of SNR's principal creditors have been supportive.

 

The Board of SNR note that some of the creditors submitting the liquidation notice have claimed (in an attachment to the liquidation notice) to have the funds available to acquire Elitheni or invest in the company. To date no approach to acquire or invest in Elitheni has been made to the Boards of Elitheni or SNR.

 

In light of Elitheni's financial position, and as announced on 6 November 2013, the Board of Elitheni informed SNR of its decision to cease operations at the Elitheni mine until long term financing can be secured by Elitheni.

 

Short term loan from Rapidtrade 644 (Pty) Ltd

 

On 6 November 2013, SNR announced that Elitheni had been offered a short term funding facility of ZAR15,000,000 (approximately £915,000) (the "Rapidtrade Loan") by its existing black economic empowerment partner and 20% shareholder, Rapidtrade 644 (Pty) Ltd, ("Rapidtrade"). On the same date SNR announced that Rapidtrade had agreed to advance certain of the funds under the Rapidtrade Loan to Elitheni immediately to assist Elitheni's short term funding needs. The proposed terms of the Rapidtrade Loan were set out in the announcement on 6 November 2013 which included the potential for the loan to be converted by Rapidtrade into a 10% shareholding of Elitheni, to be taken from SNR's 74% equity interest in Elitheni.

 

Elitheni and SNR are still in discussions with Rapidtrade in order to finalise the terms of a loan agreement between Rapidtrade, Elitheni and SNR and a further announcement will be made once the loan agreement has been entered into.

 

Short term loan from Land Consultants Limited

 

Elitheni and SNR are in discussions with Land Consultants Limited ("LCL") about the repayment of the short term bridging loan provided by LCL to the Company, which is due to be repaid on 31 December 2013, as announced on 13 September 2013. These discussions are on going and a further announcement will be made in due course.

 

Update on the proposed strategic investment

 

The board of SNR has been informed that discussions are continuing between Elitheni and a number of parties with a view to these parties providing strategic longer term finance for Elitheni to secure a more permanent recapitalisation of Elitheni and to enable mining operations at Elitheni to recommence. The parties include existing major shareholders of SNR, a South African Government Agency (who would likely provide the strategic investment by way of a grant to Elitheni) and an overseas coal trader who are looking at entering a royalty arrangement with Elitheni.

 

There can be no certainty that Elitheni will be able to secure any long term strategic funding.

 

Further announcements will be made in due course.

 

For further information, please contact:

 

Strategic Natural Resources plc

Andy Brennan, Chairman

Gabriel Ruhan, CEO

+44 (0)20 3328 5656

Allenby Capital Limited - Nominated Adviser and Broker

Nick Naylor/Mark Connelly/James Reeve

+44 (0) 20 3328 5656

FTI Consulting

Ben Brewerton/Georgia Mann

+44 (0) 20 7831 3113

 

For further information about Strategic Natural Resources plc please visit www.snrplc.co.uk

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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