Cline Closes C$6.9 Million In Financing, New Elk Coal Mine Update
February 11, 2010
Cline Mining Corp. has closed a total of $6.9-million in debt and equity financing, the details of which were initially outlined in the company's Jan. 6, 2010, news release available in Stockwatch. The financing consists of funds that will be applied to complete the rehabilitation of the New Elk metallurgical coking coal mine in Colorado, which is currently in full progress, and for working capital.
The debt financing comprises a $3.0-million loan from Mitsui Matsushima International Pty. Ltd. of Tokyo. The loan bears interest at 6 per cent per annum, and both the principal and interest are repayable in one year, with a lender's option to extend for a further year. The proceeds from the loan will be applied directly to completion of the rehabilitation plan at the New Elk coal mine.
The equity financing consisted of a brokered private placement of $3.9-million, completed through PowerOne Capital Markets Ltd. as agent. The $3.9-million was raised through the sale of 13 million units at a price of 30 cents per unit. Each unit consists of one common share in the capital of the company and one-half of one common share purchase warrant of the company. Each whole common share purchase warrant entitles the holder to purchase one common share of the company at any time until Feb. 11, 2012, at an exercise price of 40 cents per share.
Cline Mining's New Elk coal mine in Colorado has a long and successful history of producing and delivering high-quality metallurgical (coking) coal from its underground mine in southern Colorado to the steel-making industry. The mine has a large measured and indicated coal resource of 315 million tons of in-place coal, which is detailed in its National Instrument 43-101-compliant technical report of May 8, 2008. In addition to its large coal resource, the coal mine assets include a coal preparation plant, product coal silos, and rail load-out, buildings, railway right of way, surface real estate, conveyor systems, electrics, underground workings with mine portal access from the plant site, mine permit, and a permitted coal refuse disposal site. The mine is accessed directly by paved highway from the town of Trinidad, southern Colorado.
Cline is continuing with the reactivation and upgrading of service infrastructure concurrently with the mine rehabilitation program. The company has awarded TK Mining Services LLC the contract for exploration and rehabilitation of the New Elk mine. The New Elk mine rehabilitation program is presently in progress for completion in July, 2010. First saleable production of coking coal from the New Elk mine is expected in the fourth quarter of 2010. The New Elk mine will reach an annual capacity of 1.3 million tons in 2011, proceeding continuously to the production and sale of three million tons of coal annually, slated for world export markets. The mine has large in-place, compliant, coal resources, and further significant increases in production over the initial three-million-ton annual rate can be contemplated in the future.
The New Elk coal mine near the town of Trinidad in southern Colorado will directly employ 450 employees, providing additional jobs to support suppliers and independent contractors in the community. The company's president and chief executive officer, Ken Bates, is pleased that the New Elk mine puts Cline in a position to support the local community. "We are confident that the New Elk coal mine holds exciting opportunities for the shareholders of Cline and also creates employment opportunities that will positively affect the people of Trinidad."
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