CD CAPITAL TO INVEST UP TO A$83 MILLION IN PRAIRIE S LUBLIN COAL PROJECT

Transcription

1 ASX RELEASE 20 JULY 2015 CD CAPITAL TO INVEST UP TO A$83 MILLION IN PRAIRIE S LUBLIN COAL PROJECT Prairie has agreed the terms fr an investment f up t A$83 millin frm glbal natural resurces private equity fund CD Capital t upgrade, expand and develp the Lublin Cal Prject CD Capital have cmmitted t be a key strategic funding partner in the upgrading, expansin and develpment f Prairie s Lublin Cal Prject The investment is structured in three tranches as fllws: a private placement by PDZ Hldings Pty Ltd (a whlly-wned subsidiary f Prairie which indirectly hlds the Lublin Cal Prject) f nn-interest bearing cnvertible lan ntes with an aggregate principal amunt f A$15 millin t CD Capital, exchangeable fr rdinary shares f Prairie at A$0.335 per share the grant f unlisted ptins in Prairie with an exercise price f A$0.60 per ptin fr a further A$13 millin nce exercised; and a pririty right fr CD Capital t invest a further A$55 millin in any future funding cnducted by Prairie The receipt by PDZ Hldings f the initial A$15 millin will fund the de-risking f the Prject twards a cnstructin decisin The cmpletin f the transactin will fully fund all required wrks up t a psitive mine develpment decisin at the Lublin Cal Prject, including the cmpletin f a Definitive Feasibility Study and all required permitting CD Capital securing rights t prvide A$55 millin as part f future Prairie fund raising prvides a slid platfrm fr Prairie t prgress prject financing fr the successful develpment f the Lublin Cal Prject In recgnitin f the abve, CD Capital has the right t appint tw directrs t the Bard f Prairie Based n current share capital, exchange f the lan ntes will result in CD Capital hlding apprximately 30% f the rdinary shares f Prairie and exercise f the ptins will result in CD Capital acquiring an additinal 15% sharehlding (45% in ttal) Prairie Mining Limited ( Prairie r Cmpany ) is pleased t annunce that it has executed an investment agreement with CD Capital Natural Resurces Fund III LP ( CD Capital ). Subject t sharehlder apprval f the transactin, CD Capital will becme a key strategic investr in Prairie via a private placement by PDZ Hldings Pty Ltd ( PDZ Hldings ) (a whlly-wned subsidiary f Prairie which indirectly hlds the Lublin Cal Prject ( Prject r LCP )) f nn-interest bearing cnvertible lan ntes ( Ntes ) with an aggregate principal amunt f A$15 millin t CD Capital, which can be exchanged int rdinary (cmmn) shares in Prairie at A$0.335 per share. The transactin als invlves, n exchange f the Ntes, the grant f unlisted ptins in Prairie fr a further A$13 millin nce exercised and a further pririty right t prvide the Cmpany r its subsidiaries with capital f A$55 millin as part f any future capital raising, whether equity r debt, by Prairie fr the develpment f the LCP. CD Capital is a glbal natural resurces private equity fund with a prven track recrd f successfully identifying and investing in wrld-class mining and resurce assets at the grwth equity stage. CD Capital unlcks value in high quality mining prjects thrugh a strategic hands-n apprach t develpment and has a lng term investment hrizn. CD Capital s underlying investr base is made up f prfessinal institutinal investrs with strng representatin frm endwments and fundatins.

2 The prceeds frm the transactin will be used t cmplete a definitive feasibility study fr the LCP and will fund all required wrk prgrams t enable the Cmpany t make a develpment decisin. Prairie s CEO Ben Stikvich said: We are delighted t welcme CD Capital, as a strategic, lng term investr and sharehlder in the Cmpany. They are an experienced and well-funded natural resurces private equity fund wh successfully identify and invest in wrld-class mining and resurce assets. Their significant investment in the Lublin Cal Prject is testament t the prject s utstanding fundamentals and ptential, and prvides the Cmpany with a slid base t prgress rapidly twards develpment. CD Capital s Funder & CIO Carmel Daniele said: This investment is an exciting pprtunity t expand and develp the Lublin Cal Prject int a wrld class resurce. It is a high quality prject where we can achieve ur investment mandate thrugh a strategic partnership f ur deep industry expertise with the experienced and cmmitted Prairie management team. Details prvided by CD Capital: CD Capital is an established and UK FCA registered fund manager with a specific fcus n the mining sectr. The strng experienced team f CD Capital currently manages three private equity investment funds with assets under management f ver USD$400 millin. This investment is the first by the grup's newest fund - CD Capital Natural Resurces Fund III LP. As evident frm the quality f this investment, CD Capital cntinues t achieve its mandate f partnering with leading mining entrepreneurs and strngly-aligned management teams t build wrld class mining prjects frm the highest quality pipeline. A summary f the key cmmercial terms f the investment agreement and the Ntes is included belw. Further transactin details will be included in a Ntice f General Meeting t be sent t sharehlders in due curse. Fr further infrmatin cntact: Ben Stikvich Hug Schumann Chief Executive Officer Business Develpment inf@pdz.cm.au Figure 1: Prairie s Lublin Cal Prject Page 2

3 KEY COMMERCIAL TERMS OF INVESTMENT BY CD CAPITAL Subject t sharehlder apprval and ther standard cnditins precedent, an initial placement by PDZ Hldings t CD Capital f A$15 millin f Ntes. These Ntes are cnvertible int rdinary shares f PDZ Hldings and these shares will be exchanged int rdinary fully paid shares in Prairie at an issue price f A$0.335 per share, being the 10 day vlume weighted average price f Prairie s shares n the ASX t 17 July Key terms f the Ntes include the fllwing: CD Capital can cnvert its Ntes in PDZ Hldings t rdinary shares in PDZ Hldings and then exchange these shares fr rdinary shares in Prairie (althugh it is nt anticipated that any cnversin will ccur in the shrt term); The Ntes are nn-interest bearing; The Ntes are nly repayable in an event f breach f the terms f the investment agreement; Prairie is able t effect the exchange f the Ntes int cmmn equity in the event f an uncnditinal takever f the Cmpany r after 12 mnths prvided that the 30 day VWAP f Prairie s shares exceeds the cnversin price f A$0.335 per share; and One ptin (exercisable at A$0.60 n r befre 3 years frm the date f issue) will be issued fr every tw shares issued n cnversin f the Ntes ( Optins ). CD Capital shall have the pre-emptive right t prvide the Cmpany with funding up t an aggregate value f A$55 millin n such terms agreed between Prairie and CD Capital in the future, if the Cmpany intends t raise ther capital which in aggregate exceeds A$10 millin. The right f pre-emptin des nt apply t any financing linked t EPC services, ff-take services r mining equipment supplies fr the develpment f the Prject and als excludes prject finance fr the cnstructin f the mine at the Prject. CD Capital will have the right t appint tw nminees t the bard f Prairie fr s lng as CD Capital hlds a 15% interest in Prairie n an as-cnverted basis, and ne nminee fr s lng as it hlds a 5% interest n an ascnverted basis. Subject t ASX prviding the Cmpany with a waiver frm the relevant Listing Rule, if the Cmpany issues rdinary shares t any persn r entity prir t the release f the results f a bankable feasibility study, CD Capital will have the right t subscribe fr additinal rdinary shares t maintain its percentage sharehlding in the Cmpany n an as cnverted basis immediately prir t the issue f such rdinary shares. The investment agreement cntains cnsent rights fr the benefit f CD Capital in respect f the Cmpany and its subsidiaries which will include, withut limitatin: Any amendment f the Cnstitutin f the Cmpany which impacts the rights f CD Capital; The expansin f the business therwise than thrugh the Cmpany and its subsidiaries; Changing the nature f the Cmpany s business; Passing any reslutin t wind up the Cmpany r any subsidiary slvently r entering int a scheme f arrangement with creditrs; and The funds invested by CD Capital will nly be used fr the agreed purpse, being the develpment f the Lublin Cal Prject and crprate verheads. There is n grant f prject ff-take and prduct marketing rights as part f the investment. The investment agreement als cntains the usual warranties and indemnities cnsidered standard fr this type f investment. Cnditins precedent f the transactin include the fllwing: Prairie sharehlders apprving the issue f rdinary shares and Optins t CD Capital pursuant t the exchange f the Ntes ( Sharehlder Apprval ); and upn Sharehlder Apprval being satisfied ther cnditins precedent which are cnsidered standard fr an agreement f this nature including n material adverse change, n law r litigatin prhibiting the transactin, representatins and warranties f the parties being true and crrect and the parties cmplying in all material respects with their bligatins under the investment agreement. The investment agreement may be terminated if any cnditins precedent are nt satisfied r waivered by 30 Nvember Page 3

4 ABOUT THE LUBLIN COAL PROJECT The Lublin Cal Prject is a large scale premium cal prject acrss tw cal cncessins in suth eastern Pland. In April 2014 Prairie published the results f a Scping Study fr the Lublin Cal Prject which cnfirmed the ptential fr a wrld class high margin metallurgical and premium cal peratin (refer ASX annuncement 28 April 2014). The Scping Study assumed annual perating csts at US$37 per tnne which wuld place the Prject n the lwest psitin n the glbal cst curve fr cal delivered int Eurpe. Figure 2: Lublin Cal Prject Cncessins The Prject is lcated clse t well established reginal rail and prt infrastructure with underutilised bulk carg capacity fr lw transprtatin csts within Pland, t reginal Eurpean markets by rail, and t the seabrne exprt market thrugh underutilised prts in the nrth f Pland. The Prject is situated adjacent t the Bgdanka cal mine which has been in cmmercial prductin since Bgdanka has successfully demnstrated that the Lublin Cal Basin has the ptential t hst a new generatin f large scale cal prjects. The Lublin basin has ideal gelgical and mining cnditins fr high prductivity lngwall plw peratins. As a result f these favurable cnditins Bgdanka has previusly achieved wrld recrd prductin rates and is currently the lwest perating cst hard cal mine in Eurpe. In FY2014 Bgdanka prgressed its annunced expansin prgram t increase nameplate prductin capacity t between Mt per annum (depending n gelgical cnditins). Bgdanka prduced 9.2 Mt f saleable cal in 2014 and is targeting prductin f 8.5 Mt in 2015 with a fcus n peratinal efficiency and cst reductin. Page 4

5 Frward Lking Statements This release may include frward-lking statements. These frward-lking statements are based n Prairie s expectatins and beliefs cncerning future events. Frward lking statements are necessarily subject t risks, uncertainties and ther factrs, many f which are utside the cntrl f Prairie, which culd cause actual results t differ materially frm such statements. Prairie makes n undertaking t subsequently update r revise the frwardlking statements made in this release, t reflect the circumstances r events after the date f that release. Cmpetent Persn Statements The Cmpany advises that the infrmatin relating t the Scping Study referred t in this annuncement is based n lwer-level technical and preliminary ecnmic assessments, and is insufficient t supprt estimatin f Ore Reserves r t prvide assurance f an ecnmic develpment case at this stage, r t prvide certainty that the cnclusins f the Scping Study will be realised. The infrmatin in this annuncement that relates t Prductin Targets and the Scping Study was extracted frm Prairie s ASX annuncement 28 April 2014 entitled Scping Study Cnfirms Ptential fr Wrld Class High Margin Met and Thermal Cal Prject available t view n the cmpany s website at The infrmatin in the riginal ASX annuncements that relates t Prductin Targets and the Scping Study is based n infrmatin cmpiled r reviewed by Mr Rbin Dean wh is a Cmpetent Persn and is a Member f the Institute f Materials, Minerals and Mining (UK). Mr Dean is emplyed by independent cnsultants Wardell Armstrng LLP which wns Wardell Armstrng Limited. Mr Dean has sufficient experience that is relevant t the type f mining peratin under cnsideratin and t the activity being undertaken t qualify as a Cmpetent Persn as defined in the 2012 Editin f the Australasian Cde fr Reprting f Explratin Results, Mineral Resurces and Ore Reserves. Prairie cnfirms that: a) it is nt aware f any new infrmatin r data that materially affects the infrmatin included in the riginal ASX annuncement; b) all material assumptins and technical parameters underpinning the Cal Resurce, Prductin Target, and related frecast financial infrmatin derived frm the Prductin Target included in the riginal ASX annuncement cntinue t apply and have nt materially changed; and c) the frm and cntext in which the relevant Cmpetent Persns findings are presented in this annuncement have nt been materially mdified frm the riginal ASX annuncement. Page 5