AQC Secures $60 Million Funding to Revive Operations at Dartbrook Coal Mine

Australian Pacific Coal (AQC) and Tetra Resources, in a strategic partnership, have reached a pivotal juncture by successfully concluding negotiations for a substantial $60 million (AUD 91.01 million) debt facility with Vitol Asia. This financial arrangement stands as a key catalyst in facilitating the reactivation of operations at the Dartbrook coal mine, which has remained in a state of care and maintenance for an extended period of 18 years. The infusion of this significant investment is expressly earmarked to cover anticipated restart expenses, ranging from equipment procurement to essential remediation efforts.

The agreement, unveiled on November 30, 2023, materialized following an in-depth due diligence period, reflective of the parties' commitment to meticulous planning and strategic decision-making. Structured as a loan notes issuance agreement, the $60 million facility is tailored for a three-year term, with repayments strategically scheduled to commence after an initial grace period. This carefully considered grace period is strategically instituted to allow for a seamless startup of production at the mine, mitigating immediate financial strain during the crucial initial phases.

The overarching objective of this substantial financial support is to guide the Dartbrook coal mine through its initial stages until it attains its first coal production. This holistic approach includes provisions for the acquisition of additional mining systems, deemed essential for achieving optimal production capacity.

A critical dimension of the financial framework is the establishment of security for the loan, which is underpinned by the assets and shares of the joint venture (JV), supplemented by a parent company guarantee from APC. This well-structured arrangement is designed to accord the loan a senior security position, bolstering its stability and priority. Additionally, the agreement involves the subordination of shareholder loans and features an interest rate tied to the one-month SOFR (secured overnight financing rate), augmented by a margin.

A noteworthy feature of the debt facility is its inherent flexibility, allowing for the offsetting of repayments against coal sales. This strategic flexibility provides AQC and Tetra Resources with a valuable tool for managing financial obligations, enhancing their adaptability to market dynamics. Equally significant is the absence of penalties for early repayment, underscoring a pragmatic approach to financial management and further positioning the joint venture for success in the evolving landscape.

The successful finalization of the $60 million debt facility emerges as a watershed moment for the Dartbrook coal mine, hinting at the potential renaissance of operations following nearly two decades of care and maintenance. This substantial financial infusion not only lays a robust foundation for meeting restart expenditures but also positions the mine strategically for a seamless transition into coal production. The carefully crafted terms of the agreement, including the grace period and coal sales offset provisions, highlight a deliberate and thoughtful strategy aimed at ensuring the financial viability and success of the Dartbrook coal mine's resurgence.