Besieged West Coast mine developer Bathurst Resources has
ruled out further capital-raising before it begins mining
operations on the Denniston plateau, above Westport.
Bathurst has postponed the start of Denniston plateau
operations because of the depressed global price of coal,
around $US120 ($NZ138) a tonne at present, but is confident
cashflows from its three existing South Island boutique mines
will suffice for at least the next 18 to 24 months.
However, with global premium hard coking coal prices earlier
this month touching a record low of $US108.20, Bathurst may
have a long wait before prices are buoyant enough to start
full-scale export production.
Bathurst is to make an announcement today on a pending
private placement expected to raise up to about $6.8 million,
most of which will go towards having cash bonds on hand for
the Department of Conservation, (Doc) for the Denniston
Bathurst went into a trading halt on Monday while the $6.8
million book build was being undertaken and analysts had
assumed the placement was for funding for ongoing operations.
However, when contacted yesterday, Bathurst managing director
Hamish Bohannan said the private placement was being sought
in order to have the multimillion-dollar bonds available for
Doc, for when Denniston became operational.
''We want to have the cash at hand and be ready to go,'' Mr
Bohannan said, adding a ''significant part'' of the up to
$6.8 million was for Doc bonds regarding mine access
Aside from a $18.9 million raised from institutional
investors last September, a market update last month by
Bathurst noted its cash and short-term deposits stood at $10
When asked about cashflow in the coming 18 to 24 months and
whether Bathurst would be going back to shareholders, Mr
Bohannan said ''No, that's not the plan''.
''We want to build the business [with domestic sales]. The
[Denniston] permits are in place and we want to be ready to
go,'' he said.
''We don't want to trip up now,'' Mr Bohannan said,
acknowledging the hundreds of millions spent to date and a
massive plunge in share value as litigation dragged on.
Craigs Investment Partners broker Peter McIntyre said
Bathurst was ''having to tread a fine line'' at present, and
was able to go to shareholders only ''so many times'' for
top-up capital funding.
Wile Bathurst could rely on its three domestic operations to
offset the present China downturn, it ''can't wait forever
for the cream''.
''The future is not rosy; we can't imagine anything happening
[positively with pricing] for the next 12 months,'' Mr
Bathurst shares hit an all-time low of 6.6c in mid-February,
and were at 8.2c yesterday; a far cry from the high of $1.74
three years ago.
Mr Bohannan was asked at what price Bathurst could begin
Denniston plateau mining.
He said production costs were expected to be about $US100 per
tonne, but the initial starting-up period would be at a
''much higher cost''.
When to start depended on global market prices, which were
''bumping along the bottom'' at present.
It is estimated that aside from multimillion-dollar legal
costs, Bathurst has spent more than $300 million in
consenting, mine purchases and development during the past
four to five years.
Other notes to the market said capital required for the
initial start-up on the Denniston plateau, was around $2.7
million for bonds and a $1.7 million compensation payment.
The three South Island mines are Cascade, adjacent to the
Denniston plateau and supplying a cement plant, Takitimu in
Southland and Canterbury Coal, near Christchurch.
Mr Bohannan was asked if Bathurst expected to increase the
estimated annual 400,000 tonne production of the trio, during
the next financial year.
He said he would ''like to think'' domestic production from
the three might be increased.
Medium-term domestic projections by Bathurst have the
combined three mines increasing production 100% over four
years, rising from 400,000 tonnes to more than 800,000